Compania de Distribucion Integral Logista Holdings SA
MAD:LOG
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Compania de Distribucion Integral Logista Holdings SA
Earnings Call Analysis
Q3-2023 Analysis
Compania de Distribucion Integral Logista Holdings SA
The company concluded 2023 on a strong note, with notable organic growth and successful integration of new acquisitions. A strategic pivot allowed for more than half of sales to originate from non-tobacco products for the first time, marking a significant shift in the company's portfolio and highlighting the resilience of its diversification strategy. The integration of new acquisitions is proceeding smoothly, with synergies being actively realized in various operational segments, contributing to improved economic sales and profits.
A renewed credit line agreement with Imperial Brands ensures financial stability for the upcoming years, reinforcing the company's income stream. The positive financial performance led the company to propose a substantially higher dividend at the next stakeholders' meeting, with a recommendation to distribute EUR 1.85 per share for fiscal year 2023. This marks a significant increase of 34% over the previous year's dividends, evidencing the company's commitment to shareholder returns.
The company's dedication to Environmental, Social, and Governance (ESG) principles is reflected in their updated sustainability policy and new governance structure. They surpassed sustainability targets with 78.5% of kilometers being sustainable across key business units and invested in energy-efficient infrastructure. Recognition from ESG ratings and indices, such as EcoVadis and the Bloomberg Gender Equality Index, further validate the company's ESG efforts and its alignment with broader societal values.
Regionally, each market recorded year-on-year growth in economic sales, particularly notable in Iberia, which saw a 58% increase, and Italy, where sales grew by 12%. The new acquisitions, such as those in the transport sector, doubled the previous year's economic sales and spearheaded growth in the underlying business segments. Combined routes and operations optimizations are among the drivers of these positive outcomes.
Continuing with the diversification strategy, the company has secured acquisitions in non-tobacco sectors, such as Gramma Farmaceutici, marking a significant move into pharmaceutical distribution in Italy. Another key acquisition was SGEL Libros in Spain, which solidified Logista Libros's position as a leading book distributor. These additions to the company's portfolio not only diminish its reliance on tobacco but also open pathways for future organic and inorganic growth opportunities.
For 2023, a robust financial performance was reported, with a 36% increase in economic sales and a significant 37% growth in net profit compared to the previous year. The company benefited from high-interest rates contributing to an increased financial income and from extraordinary inventory profits. Looking forward, the company expects mid-single-digit growth in adjusted EBIT, not including profit from inventory, indicating a confidence in its core business operations to drive sustainable growth.
The company is well-positioned to pursue further mergers and acquisitions, with a reasonable firepower estimated at around EUR 1 billion. This strategy for M&A is focused on small to medium-sized opportunities, particularly in markets where the company already holds a strong presence. Despite exploring the potential of more significant deals, the emphasis remains on enhancing its transport services and broadening its diversified product offerings.
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Good afternoon, everyone, and welcome to Logista's Full Year Results Presentation. I'm Isabel Troya, Head of Investor Relations for Logista. And today, Inigo Meiras, our CEO; and Pedro Losada, our CFO, will walk you through the results obtained during our 2023 fiscal year.
At the end of the presentation, we will have a Q&A session, in which we will answer all the questions submitted through the platform. You may write your questions at any time during the presentation. Now Inigo will go through the highlights of the period. Inigo, if you may, we can proceed with the presentation.
Thank you, Isabel, and good afternoon to everyone, connected today for our results presentation. I would like to start the presentation by going through the main highlights for the period. During 2023, we have obtained a solid set of results, thanks to the integration of the new acquisitions and to the organic growth of our traditional business.
We have continued to advance with our diversification strategy, which has allowed us to achieve more than 50% nontobacco related economic sales for the first time ever. We can confirm that the integration of the new acquisition is going well, and we have been able to extract synergies, which I will describe in the next slides.
In August this year, we signed the renewal of the credit line agreement with Imperial Brands, securing our financial income for the coming years. Given the good results we have obtained this year, we are able to propose to the next annual stakeholders meeting a high dividend for 2023.
And lastly, I would like to mention our ESG efforts during the year, which involved the creation of a new governance structure on sustainability matters. In the following page, I will review you further details of these main highlights.
Focusing on our results, despite the adverse microeconomic environment we have had during the period where inflation has remained high, affecting growth expectations. Logista has obtained our outstanding results in his main indicators.
Economic sales has recorded 36% increase year-on-year, up to a total of EUR 1,684 million. In relation to the split per area, Iberia economic sales of more than EUR 1 billion after the consolidation of the new acquisitions.
Italy reached EUR 370 million and France, EUR 226 million. All 3 regions recorded year-on-year increases, reflecting growth coming from the new acquisition and from the underlying businesses. As per the adjusted EBIT, it recorded an increase of 17%, up to EUR 366 million, and net profit has reached EUR 272 million, which is an increase of 37% against 2022.
I would like to mention 2 relevant items of our P&L account this year, a EUR 30 million profit on inventory and a financial income of EUR 84 million. Pedro will give you more details on the financial figures later in the presentation.
As you may recall, a couple of years ago, we have lined a new diversification strategy aimed at the reduction of the exposure of Logista to tobacco, but without giving away the actual business itself, among other given his profitability.
This strategy 6, the resilience of Logista and given the fact that tobacco is a declining business, and it also looks for a more sustainable approach of the company by reducing the exposure to this product. The first step and the successful implementation of the strategy was to create a new strategy and M&A team, we did back in 2020.
This thing has been the responsible one for finding and closing the transaction we have announced starting with Speedlink back in 2022 up to the last 2 transactions of Gramma and SGEL Libros in the past months. The successful implementation of the strategy has allowed us for the first time to surpass the 50% threshold of economic sales of nontobacco sources.
We will continue to seek new acquisitions which create synergies with [indiscernible] businesses that allowed us to export our Iberian businesses into the rest of the countries in which we operate or even other European countries, while executing our diversification strategy.
Moving on to the actual integration of the acquisitions. I would like to start with cargo. The company was acquired in October 22 and has been consolidated within Logista for the full year -- for the full fiscal year 2023. During the year, we have been actively working on the combination of routes.
For example, we have integrated long distance routes for food sector, and we have also implemented the last mile synergies, particularly in Madrid and Barcelona. In terms of infrastructure, we have already combined 9 platforms. This allows us to reduce rental cost and optimize our logistics and distribution processes.
We keep looking for further opportunities to optimize cost, whether in terms of infrastructure or personnel. Lastly, we continue to combine further routes, leveraging on parcel existing platforms.
Moving now on to the acquisition of El Mosca. We initially acquired 60% stake in October 22. And in August this year, we have carried an additional 13.3% closing fiscal year with 73.3% stake. The acquisition of El Mosca brings to Logista additional capabilities in long freights and [indiscernible] control transportation.
It has a new service to our service catalog with sea freight, logistics and transportation business line. To enable El Mosca to transport high-quality goods such as tobacco, we have installed security system into the trucks and trailers, having installed this system as of year-end in 80 trucks and 110 trailers.
This has allowed us to combine routes between both companies, transporting fruits and vegetables from Spain to the North of Europe and returning with tobacco.
In the sea freight business, we have also combined routes, optimizing containers usage, both towards Spanish, Iceland and internationally. Lastly, we also obtained the GDP certification for El Mosca to enable pharma distribution services.
We continue to look for opportunities to improve the integration of El Mosca with Logista by installing more security systems, combining further routes are looking for groupage opportunities among the different transportation business units in Logista.
Following our diversification strategy, we have secured further acquisitions in nontobacco businesses. The first one I would like to mention is Gramma Farmaceutici in Italy. This transaction, despite being very small from an economic point of view, represents an important milestone for Logista. And this is the cornerstone of our pharma distribution and logistics services in Italy.
With this acquisition, we have gained the necessary license to operate within the pharmaceutical related business in Italy. Additionally, the acquisition brings several distribution contracts with local laboratories in which to leverage and gain organic growth while we continue to see for further inorganic opportunities in the Italian pharma sector.
Gramma has a 25,000 square meter facility in the area of Rome and offers a variety of services, including integrated logistics, order picking and warehousing, logistical sorting and cold storage of the [indiscernible]. The second acquisition that we'd like to mention is the acquisition of SGEL Libros in Spain.
This transaction has been closed through Logista Libros, our 50% subsidiary. With this transaction, we strengthened Logista Libros position as the largest independent book distributor in Spain by adding a relevant editorial client base and several educational books. SGEL distribute to more than 8,000 points of sale through various marketing channels, including bookshops, [indiscernible] hypermarkets as well as online distribution handling more than 300,000 orders a year.
Moving on to the next highlight. In the month of August, we signed the renewal of the credit line agreement with Imperial Brands. Within the near terms, we have increased the maximum amount of the credit line to EUR 3 billion compared to the previous maximum EUR 2.6 billion.
Another near term has been the change of the reference rate from ECB to Euribor 6 months to which we have added a close for a minimum 0% base rate to secure Logista remuneration should Euribor be negative again in the future.
The spread added to this new reference rate remains the same at 75 basis points. The agreement considers a minimum compulsory turns of 3 years for both parties, after which the contract remains in place unless either party in front with a 6-month notice period.
New terms included will be effective as of June 2024. With this renewal, we secured an optimal remuneration of our cash position for the coming years. We remain committed to our dividend policy of distribution at least 90% of net profit. We know this is a key element for Logista Investor and thus we will propose during the next Annual shareholders meeting to distribute EUR 1.85 per share for fiscal year 2023.
This represents a total distribution of EUR 245 million and a 34% increase over dividends of 2022. '23 has been an another year, thanks to the consolidation of the acquired businesses to the extraordinary profit on inventory and the financial income recorded during the year.
In particular, the last 2 elements are substantially higher than previous year, and they both have a direct impact on the net profit of the company. With this proposal to distribute EUR 245 million for '23, Logista will have distributed more than EUR 1.4 billion in dividends since its IPO back in 2014.
And then I would like to finalize the annual highlights with ESG. At Logista, we have been committed with ESG for many years. Through different initiatives, we have recognized by various ratings and indexes. I will mention in the following slide. But before that, I would like to point out that during the year, we have updated our sustainability policy, which, amongst others, involve the creation of a new governance model on sustainability matters.
Firstly, to further expand the supervision of sustainability matters by the Board of Directors. We have renamed the controlling of the committee as a Control, Audit and Sustainability Committee, giving new competencies to this committee, including ESG matter. And secondly, we have created a new sustainability committee, which will report to the management committee and to the Audit, Control and Sustainability Committee at the Board level.
As part of this extended sustainability effort within Logista, I would like to mention that we are embedded in the process of deployment and strategic sustainability plan for the next 3 years, '24 to '26, which will detail specific objectives and actions to be taken by the company. We will give further details on this in the coming months. During 2023, we have continued to take action in ESG matter.
Beyond the new governance model, I just mentioned during the year, we surpassed the goal of increasing by 15% the number of sustainable kilometers rolled at Logista Freight, Logista Parcel and Nacex, our transport activity. This objective was established in 2020, when kilometers done by sustainable fleet represented 60% of total kilometers with the aim of reaching 75% by 2023.
I can gradually say that we have reached 78.5% of total kilometers done by more sustainable fleet for all 3 business units. Additionally, we have invested in more efficient vehicles. For example, we invested in Luo trailers, which allowed for a reduction of emissions produce by increasing the capacity under one track.
We also invested in trailers, which can be adapted to a train, allowing for train-road transportation. And lastly, through El Mosca, we have acquired 10 40-ton electric trucks. As per electricity usage, we have continued to install solar PV panels in our warehouses. And we can confirm that our all warehouses in Spain, Italy, France and Portugal and the main ones in Poland run renewal or low certificate electricity.
In the social aspect, we have reached an agreement with several foundations. For example, the Integra Foundation in Spain, which among the other things, focus on helping people in [indiscernible] social exclusion to find an employment.
Once again, Logista has been recognized by different ESG ratings and indexes, but I would like to point out to net recognition we have achieved in 2023. Firstly, within the silver medal from EcoVadis, where we have been included within the top 9% of the base value companies in our industry and considering only the environmental aspects.
It plays Logista within the top 1% of the industry. And secondly, we have also been included within the Bloomberg Gender Equality Index for the first time, which tracks the performance of public companies committed to disclosing their efforts to support gender equality through policy development, representation and transparency. Now I will hand over to Pedro, who will walk you through the results of the regions on a consolidated level. Pedro, if you may.
Thank you very much, Inigo, and thank you all for attending our full year results. As Inigo mentioned, I will now go through the different businesses. And later on, I will give you some details of the consolidated financial figures.
Starting with Iberia, our largest market, we have obtained outstanding results in all major segments, reaching a total over EUR 4.5 billion in revenues, followed by EUR 1 billion of economic sales, which represents a year-on-year increase of 58%. Lastly, adjusted EBIT recorded EUR 198 million after an increase of 29%.
Looking at each specific segment in the tobacco and related products. Tobacco volumes during the period decreased by 1.8% after a fall of 3% in traditional tobacco in Spain, compensated by a strong increase in the distribution of NGP products and a flat rate in traditional tobacco in Portugal.
These segments recorded 15% year-on-year growth in economic sales supported by an estimated profit on inventory of EUR 27 million as a result of the price increase by tobacco manufacturers, the increase in distribution tariffs and a double-digit growth in economic sales in the convenience products distribution.
In the Transport segment, the good performance of the underlying business and the addition of the new acquisitions have translated into the segment duplicated last year's economic sales up to EUR 677 million. Within the different Transport business lines, all of them have recorded a healthy growth rates, thanks to the increase in tariffs, new services sold to existing clients and the good performance of the underlying business.
In Pharma, we have managed to grow our economic sales by 3% versus 2022 despite the reduction of COVID related sales by increasing services provided to existing clients and seeking new clients within both the pharmacy and the hospital world.
We also secured a tender with the Ministry of Health to manage the strategic reserve for health crisis in Spain. Lastly, our publication segment was the only segment which recorded a slight decrease year-on-year in economic sales, but it is worth mentioning the new agreements signed with RBA leading in collectibles and magazines in Spain to become the sole distributor in Spain. This contract came into effect during the third quarter of 2023.
Moving on to Italy. Total revenues reached EUR 4.3 billion and economic sales, EUR 370 million, which represents a 6% and 12% increase, respectively, versus last year's figure. During the first quarter of 2023 fiscal year, the government increased taxes on tobacco, which led to price movements for some manufacturers during the rest of the year.
These price movements did not offset fully the negative change in inventory recorded during the first quarter of the year, but it has compensated some of it, closing the period with a negative inventory impact of EUR 3.5 million.
In terms of total tobacco volumes distributed, they remain stable after a decline of close to 3% in traditional tobacco volume, which was offset by a very good performance of NGP distribution particularly in hits. Looking into the convenience distribution segment, we continue to have a double-digit year-on-year growth, thanks to adding new products into the distribution catalog such as beverages and the increase in sales of NGP products, particularly e-cigarettes, which doubled its distribution versus last year.
Furthermore, during the year, we completed the acquisition of Gramma Farmaceutici, which Inigo has explained previously, gaining access to the pharma segment in the country. Finally, adjusted EBIT in Italy reached EUR 106 million after a 5% increase against previous year.
In France, revenues recorded a slight decrease of 0.5% up to EUR 3.8 billion. But on the other hand, the economic sales recorded a 4% year-on-year increase up to EUR 226 million. In France, there was also an increase in taxes by the government, just like in Italy, which was followed by the increase in selling price of tobacco manufacturers in some cases, offsetting exclusively the tax increase of EUR 0.50 a package and in other cases, increased up to EUR 1 per pack.
These changes in taxes and tobacco prices had an estimated positive impact of EUR 6.7 million in the value of our inventories. Looking on the tobacco volumes distributed, France continues to show a faster pace in the decrease in volumes distributed than in Spain or Italy with 7% less tobacco distributed during 2023 in comparison to the previous year.
In the sale of convenient products segment, there has been a double-digit increase in e-cigarettes, although it still represents a relatively small share of total volumes. Total adjusted EBIT for the period in France amounted to EUR 61 million, which represents a 7% year-on-year growth versus 2022.
After giving you the details of each region, we will move into consolidated figures for year 2023. The consolidated adjusted EBITDA increased by 17% to EUR 363 million supported by a positive performance of the activities, both underlying and from the new acquisitions. The strong positive impact of the inventory valuation and a contained cost increase despite the general inflationary pressures.
Digging deeper into the year-on-year differences. Economic sales grew versus last year by EUR 449 million, backed primarily by the income from the new acquisitions, the changes in inventory value and the good performance of the underlying businesses in the different regions.
The increase in logistic costs reflects the incorporation of the new businesses into the group's accounts, changing the consolidated scope and resulting in a decrease in margins by 360 basis points, given the fact that the transport business has lower margins compared to the tobacco industry.
Despite the reduction in margins, Logista advances with its strategy of lowering the weight of tobacco into our accounts through new acquisitions, but keeping the existing tobacco business which has been the core of Logista and offers unique returns.
Finally, reported EBIT reached EUR 293 million, which represents a year-on-year growth of 10%. The main impact of this metric comes from the provision of the costs associated with the closure of our warehouse in the south of France.
The closure of the asset is part of the strategy to optimize French operations and structure according to the real needs, given the fact that the tobacco industry is declining at a faster pace in France compared to the rest of our markets. Bottom line net profit of the company grew by 37%. Thanks to several factors, such as the increase in the reported EBIT of EUR 27 million or the elimination of the one-off effect related to the Supergroup discontinued operation, which was effectively sold in fiscal year 2022.
Apart from the 2 effects I've just mentioned, the largest impact on the net profit increase comes from the financial results, which have increased by EUR 57 million year-on-year, thanks to the relevant increase in interest rates. During the fiscal year, the European Central Bank has continued with the strategy of raising interest rates to alleviate the current inflationary environment having announced the latest rate hike up to 4.5% in September.
The European Central Bank's average rate for the period was 3.12% to which we should add the 75 basis points spread contemplated in the credit line with Imperial Brands. The average credit line balance during the year was EUR 2,079 million compared to the EUR 2,276 million in 2022.
On top of that, increase in profit before tax translated into a EUR 21 million higher tax expense despite the reduction of the corporate tax rate from 26.2% to 25.9%. The positive business performance during the period and the consolidation of the acquisitions in the results lead to a 23% increase in EBITDA compared to the previous year.
Additionally, financial income increased to EUR 83 million compared to the EUR 19 million in the previous year given the current interest rates. On the other hand, restructuring costs paid during the period amounted to EUR 5 million and normalized taxes reached EUR 109 million.
CapEx for the period amounted to EUR 44 million and it included among others, investments made in new installations in warehouses in Italy and in the main pharma warehouse in Spain. This investment will lower for more capacity while optimizing the productivity of the warehouses.
Besides, we also invested, as an example, in new sorters in different warehouses of Nacex to improve productivity. In semitrailers, dual trialers and in information technology systems.
Lastly, leases recorded for the period of EUR 60 million were well above the EUR 31 million recorded last year, mainly due to the new acquisitions included within the scope. We concluded our full year with a cash position close to EUR 2.5 billion.
During 2023, Logista's share price locked up 30% appreciation outperforming the IBEX 35 Index and the IBEX Top Dividend Index. We also recorded total shareholders' return of 37% without considering dividends reinvestments. I would like -- also mentioned that during the year, we reached our historical maximum share price of EUR 25.5 million on July 27. To finalize, I will hand over back to Inigo to go through the closing remarks and our expected outlook.
Thank you, Pedro, for going through the financial data. We have outlined throughout the presentation. We have been very busy during this year in integrating the acquisitions. We have also implemented synergies within the different transportation segments, and we have started to expand activities through cross-selling now that we have added several new services to our catalog, such as sea freight.
The results for the period reflect the integration of these acquisitions and the good performance of the underlying business. We have benefited from a high interest rate environment, which has translated into a significant growth in our financial income, thanks to the credit line we have with our major shareholder Imperial Brands.
Our results have also been positively affected by the change in inventory value because of change in taxes and tobacco prices in all 3 regions, but principally in Spain this time. In terms of ESG, I would like to highlight the new sustainability governance as the most relevant ESG improvement during the year. Furthermore, we continue to be fully committed with ESG which reflects in the affirmation of several ratings and the inclusion on various indices as well as through the new ratings for Logista such as EcoVadis.
Dividend continues to be a priority for Logista. And even though we continue to look for mid to a small site acquisition in order to grow the company and execute our diversification strategy. We will continue to distribute dividends according to our current policy.
In terms of outlook, we expect our business to continue registering sustainable growth for the coming year with an expected growth of mid-single-digit over adjusted EBIT. This expected growth does not consider the profit on inventory recorded in '23, given this exceptionality. Now we will proceed with the Q&A session. Isabel, please, if you may.
Many thanks for the presentation. We will now continue with the Q&A session by reading and answering the different questions that have been sent through the platform. The first question is coming from JB Capital, sorry about that. After renewal of the credit line with Imperial brands, would you explore or are you looking at any instruments to partially hedge your rate exposure?
Thanks, Miguel, for the question. The quick answer is yes. Now that we have changed the reference rate. And remember that this is from June 2024, we will have a less the option now to -- with this reference rate that is quite hedgeable to consider whether we want to hedge our position in the future.
Second question is also from JB Capital. Tobacco volumes in Italy keeps outperforming those in Spain and France, which should be partially explained by a higher penetration of next-generation products. Could you comment on the market share of this product in Italy and whether this trend do you think it's going to be extended to Spain and France?
Thank you Miguel for the question. Inigo Meiras now. I think regarding the market share of the NGPC in Italy, I think that they are achieving -- roughly speaking, 20% market share of the total tobacco market.
And regarding the second part of your question, this is a trend that you think will be extended to Spain and France?
I think there is a big gap between the current market share in Italy, if you compare with Spain and France or with other markets by Germany. And we cannot expect too much that gap in the next 2 or 3 years. I think that the market is completely different. And the Italian market is more trendy. In this case, if you compare with all the European countries. And because of that, we don't see that penetration or at the same level in the coming years.
And the third question from JB is as regards to M&A activity, maybe you could give us maybe you could guide us on what is your current firepower. What transportation areas would you be looking at? And whether we could expect a larger deal similar to the ones made in transport as El Mosca or M&A will be focused on small bolt-on acquisitions.
Thanks, Miguel, Pedro Losada, for the first part of your question, which is related to the firepower. I guess a fair number, if we consider, number one, the cash that we've got in our accounts. The free cash flow generated on a yearly basis by the company plus our ability to leverage the company even if we go to a conservative approach, probably it's a fair area of EUR 1 billion, the firepower that we could consider.
And regarding Miguel, the second part of your question, in terms of if we are looking or not for a larger deal, I think that today, we have the idea to follow the same strategy of the last 2 or 3 years, which means that we are looking for a small or midsized opportunities.
Principally in the market that we already have a strong presence. But let's see what happens in the coming months. But yes, we are, for example, analyzing 1 or 2 opportunities similar size of transporters El Mosca.
Thank you, Inigo. Next set of questions comes from Pablo Cuadrado of Kepler Cheuvreux. First one is organic CapEx, excluding M&A, was EUR 44 million. Is this reference a valid proxy to expect for 2024 fiscal year?
Thank you Pablo, for this question. And I think that, yes, you can expect that for fiscal year 2024 the organic CapEx will be around that number of EUR 44 million or EUR 45 million. Having said that, you have to take into account that if we expand the business perimeter sooner than later, probably that CapEx, as you can increase. But as for 2024, you can consider a similar level.
Next one is, can you help us to provide a reference or at least a range on the net cash position owned by Logista after excluding the cash pool linked to tobacco tax collection at the end of last year. I guess the position has declined versus last year after adding EUR 190 million of M&A investment.
Okay. Thank you, Pablo, Pedro speaking. Well, we said at the presentation and the net cash position of EUR 2.4 million that is coming from the activity of the company, including the tobacco tax collection as well. We also give a breakdown of the normalized operating cash flow and that reached EUR 334 million before the remuneration of the shareholders.
I guess with respect to your comment on whether it has been reduced because of the M&A probably, if you see this operating cash flow pretty much covers the EUR 182 million that has been invested in M&A. So it has not been produced that much.
Next question. Can you maybe provide a little more of detail on the economic impact from the synergies that you may get from the transportation segments after the consolidation of the latest acquisitions.
Thanks, Pablo. We have stated several times that we do not disclose the level of synergies that we were expecting when we acquired the companies. What we can say is we are happy with the integration. That means that we are getting the synergies that we were expecting in this first year.
Remember what we said is we are aiming to capture 100% of the synergies after 3 years from acquisition and after the first year, we are happy with the 3 acquisitions Speedlink, Carbo and El Mosca in terms of synergies capture.
And the last question from Kepler is strategically, the bolt of M&A expansion is now more likely to be focused on France or Italy or do you still find options to increase your position in the transport or pharmaceutical segment via M&A?
Well, regarding the M&A expansion in terms of geographies. Clearly, we are now more focused in Italy than in France because we have clearly a pipeline of opportunities in Italy, which is not the case in France. And in any case, I think that we are, at the same time, looking for more opportunities in transport and in the pharmaceutical segment as well, even if those opportunities comes from the Spanish market.
Next question comes from Beatriz Rodriguez, Bestinver. Could you give us more information on how much of the full year '23 growth in economic sales and adjusted EBIT would be organic and how much inorganic.
Thanks Beatriz, Pedro speaking. If we take the reported sales from El Mosca, Carbo, the leads are up to EUR 320 million, so EUR 260 million coming from El Mosca and EUR 63 million from Carbo. That means that around 20% of the economic sales comes from this inorganic growth.
If we move to the adjusted EBIT, around 6% out of the 17% comes from the inorganic growth and the remaining up to 17% comes from the organic plus the POI impact.
On the other hand, have you noticed a slowdown in demand so far in October and November, especially in the Transport division?
Well, I think during this year, Beatriz, I think that we saw some slowdown in demand, but not in October or in November. We saw that there is slowdown during the summer, especially from June to August, but after summer in September, October around in the first week of November, we are a little bit more positive. And we are recovering volumes that we thought taking into account the slowdown in summer we can be less positive than the current numbers are more positive.
The next set of questions comes from Joao Safara of Banco Santander. First question relates to how much did the acquisitions provide in economic sales, which we've already answered.
Second question is, how do you plan to grow in Italy after the acquisition of Gramma more inorganic growth or organic growth? Do you think you will be able to replicate the pharma distribution model as in Spain?
Thank you for your question. Regarding the Italian market, that's for sure, that we are looking for more inorganic growth. I think that Gramma is only the first step in our strategy to establish a strong position in the pharma sector in Italy, but we have to do more on an inorganic basis because only with [indiscernible] is not enough.
And regarding if we can replicate the pharmaceutical model as is in Spain today, the answer clearly that this is the target. And this is in our strategy. We believe that we can replicate in, we need years, but we can replicate the distribution model that we already have in Spain.
And the third question is any particular reason for the flattish year-on-year performance in pharma economic sales?
Yes. I think that the main reason for this flat is year-on-year performance in Pharma Economic sales is because last year, in '22, we still have some positive tailwinds from the COVID prices. Which is not the case in the last 12 months. And this is why you see us flattish because, as you know, we have a very positive impact of COVID crisis in our economic sales for Logista Pharma.
Next set of questions from Bestinver as well. What was the average net cash for full year '23? And what is the average interest rate?
Thank you, Beatriz. The average net cash, starting with the net cash position was 2.4%. The average cash has been during the year, almost EUR 2.1 billion. In terms of the average interest rates, remember that we have received a loan with Imperial Brand with a reference rate of the ECB, and that average has been 3.12, so when we -- that should be added the margin of 75 basis points up to lump sum of 4.87.
And last question from Bestinver. What do you expect the fall in tobacco volumes to be in full year '24?
Beatriz, I think that in the budget, in our internal budget, we are considering a same, similar figures in terms of the fall in tobacco volumes in the 3 main markets in Spain, in France and in Italy.
Next question comes from Francisco Ruiz of BNP Paribas. Is there a big increase in provisions, mainly on restructuring costs. Could you comment what are the payback for this cost.
As we explained during the presentation, we provisioned this for a closure of one of our big warehouses in the south of Spain, [indiscernible], where we are expecting to have some savings throughout the year that would be close to EUR 2 million per year. Besides, we have probably some time during 2024, the impact of the sale of the asset.
Then there's a question on synergies, which I believe we've already answered.
And next question as well from BNP is are the EUR 60 million lease cost recurrent for the future?
Yes, Francisco. Yes, we have seen an increase on leasing costs due to the increase on perimeters. And because of this inorganic growth that we have mentioned throughout the call. So I think that the answer to your question is, yes, to the extent that we are not keep on increasing that perimeter.
And then there's a question as well on CapEx, which as well answered previously.
Next question is from [ Jorge LosaCartecio ]. How much of the adjusted EBIT growth outlook of mid-single-digit derived from the synergies of the acquisitions?
Thanks, Jorge. Sorry, as we mentioned, we give the split on inorganic and organic with respect to the adjusted EBIT. But when it comes to synergies, we prefer to maintain the same level of communication. So bear with us, please.
Next question coming from [ Albaro Lenti of Alantra ]. Can you provide some early looks after entering the Italian pharma business. Do you see any synergies with the client relationship you have in Spain? What should you expect from the business in the coming years?
Okay. Regarding Italy, Albaro I think that we need to wait and see what happens in the coming 2 or 3 years. But clearly, the focus today is to grow a lot in the Italian market and mostly driven by inorganic growth, okay?
This is regarding the first part of your question. And the second one is, any synergies with the current relation you have in Spain? Yes, definitely. That is the idea, but still we need to expand geographically our presence in Italy because through the acquisition of Gramma, we have now our presence in Central Italy, around Rome, but we need to expand our operation to Northern Italy and then to the south as well.
And the second question as well from Alantra. Now that transport has a higher weight than the group sales and profits, how has the cyclicality of the business changed? Should the future economic sales evolution be more GDP-linked?
Yes, you are right. I think that transport is more cyclical than tobacco or pharma sectors. But in terms of way as today, transport is small you compare with the combination of the contribution in economic sales and in terms of EBITDA of our businesses on tobacco and pharma but we continue to grow in nontobacco and in nonpharma sectors. You are right that in the future, our economic sales evolution be more linked to the GDP.
Thank you, Inigo. That was the last question. Thank you, everybody, for joining us in this full year results presentation. Should you need any more information, we're always available at the Investor Relations team. Thank you. Goodbye.