2020 has been a very unusual year, not only for society at large, but also for us at D’Ieteren Group. When reflecting upon it now, I am convinced that we are coming out of this challenging period stronger, and more focused and determined than ever.
And this thanks to the unwavering support and commitment of all our stakeholders, in particular our personnel, our leaders and their families, our customers and suppliers, and our shareholders. A big and warm-hearted “Thank you!”
An unusual year in many respects
First and foremost, and truly unexpectedly, on December 10, 2020, we lost our Honorary President, Roland D’Ieteren. He had been active in the company since his early years, and as CEO from 1975 to 2005 and Chairman until June 2017. He dedicated his entire life to the family business that carries his name and of which he was the sixth generation. Most notably he transformed D’Ieteren into a thriving international group with deeply entrenched humanity and strong values. He continues to be a source of inspiration to all of us, and will always be.
Throughout 2020, just like everyone else around the world, we have learned to live with the Covid-19 pandemic and its many implications. At D’Ieteren Group, D’Ieteren Automotive, Belron, Moleskine and D’Ieteren Immo, we have used a set of principles to deal with the crisis as it unfolded:
- Led by our values, we prioritised the safety and well-being of our people and customers above all, following governments’ guidelines and rules in the respective geographies where the Group is active. In the case of car sales and after-sales activities in Belgium, we even designed and piloted Covid-safe operations that became the standard in the country after the first lockdown.
- The respective management teams stepped up in communication and leadership, instilling confidence and clarity towards the different organisations, both internationally and locally, and leveraging the technologies at their disposal, setting up daily video calls, weekly webinars, virtual town hall meetings, and extraordinary Board updates.
- We acted quickly and decisively in each of our businesses, to maintain our financial strength, and in reaching out proactively to all major customers and suppliers, with a strong focus on cash management. Also, a truly remarkable agility and flexibility has been demonstrated by our management teams and our people as the different phases of the pandemic unfolded, from lockdown to ramp up, from first to second waves, and this with uncertain timing and changing intensity in the different geographies throughout the year.
- Each of our activities also looked at concrete ways in which they could contribute to the vulnerable in the communities around them. Many volunteers came forward, and contributed both financially and with their energy and time.
As D’Ieteren Group, we redirected our initially planned dividend increase to a Solidarity Fund for our personnel and their families.
Lastly, at the end of the year 2020, we have also formally become D’Ieteren Group. The Belgian car distribution arm and all related activities, that had been part of the D’Ieteren s.a. legal entity structure so far, have been carved out into a separate subsidiary under the name D’Ieteren Automotive s.a. The management team that was already in place under the leadership of Denis Gorteman continues to be in charge of this important activity. A separate Board of Directors has also been appointed to oversee D’Ieteren Automotive. The new setup ensures a more dedicated structure, including appropriate financing, and gives more strategic flexibility going forward, in order to optimally anticipate future trends in the industry, and continue to be the natural choice for mobility in Belgium by building seamless and sustainable mobility for all.
Stronger, both in performance and resilience
We have delivered more than solid results in 2020, and the momentum at the end of the year is very promising for the future:
- Not surprisingly our top line remained below the record levels of 2019. Volumes were clearly affected by the different forms of lockdowns in both the spring and in autumn. At Belron, volumes decreased by 13% and we were able to limit sales decline to 7.8%. At D’Ieteren Automotive, the overall market was 22% down in number of new vehicles sold. We did manage to increase our market share, and completed the year with overall sales level that were 11.5% below 2019. At Moleskine, where many of the book retail chains and others were closed, activity was down, resulting in 38% less revenues.
- Our bottom line however surpassed the level of 2019 with 11.2% in our core “Adjusted Profit Before Tax group share” KPI, which is really a strong performance given the circumstances. It proves that cost containment has been central to our efforts this past year. Even when excluding the different government support schemes that existed in several countries, our absolute profit was up. It proves that the work we embarked on several years ago on continuous improvement is really working. In 2020 this was in particular driven by Belron, where operating margins increased by an impressive 511bps in one year.
- Even more spectacular has been the free cash flow generation over the year. The adjusted free cash-flow, is up € 335 million, or 599% versus 2019. It is a reflection of the cash preservation measures all teams around the world have been focusing on.
We have continued and even accelerated our investments in the longer term resilience of our activities, leveraging and confirming our multi-dimensional active investment model. Particular areas of focus during 2020 have included:
- At Belron, we have welcomed a new CFO on board, and the IT leadership team has been strengthened. From the summer onwards, we brought the “Fit For Growth” transformation program to a global level, in order to align and finalise the design of the future operating model of Belron in several key functional areas, like Customer Experience, Supply Chain, Finance, and Human Resources. This will allow us in 2021 and beyond to implement several important digitalisation programmes to the benefit of our customers and our personnel.
- At D’Ieteren Automotive, the leadership team was also strengthened with the arrival of a new CFO, and extended to include the Strategy & Transformation as well as Innovation functions. The Covid-19 crisis has triggered an acceleration of the transformation in light of a new Belgian automotive market reality. As a result of this, by the end of December 2020, a reorganisation involving 185 positions has been negotiated with our social partners, and was implemented.
- At Moleskine, upon the arrival of the new CEO in April 2020, the team has been reorganised, and a ‘fewer, better, bigger’ strategy has been defined. 2020 has clearly still been a transition year for the company. We are confident that the renewed focus will help Moleskine reconnect with its profitable growth strategy, once the pandemic is over.
These are just a number of examples of the topics we worked on together with the management teams of our activities. For about two years, we have structured our continuous dialogue with them around purpose and ambition, aligning ourselves on strategy, innovation and execution, as well as on the most appropriate organisational model and key people at the top. Not surprisingly, 2020 has been particularly focused on accelerating transformation.
Finally, we have pursued the implementation of our sustainability roadmap launched in 2019, focusing both on further deepening our responsible investment approach and on supporting our activities in implementing their own sustainability strategy. In terms of Responsible Investment, a highlight was the signing of the United Nations Principles for Responsible Investment (UN PRI) in October 2020. This commitment not only formalises our commitment towards contributing to a more sustainable future, but it will also ensure that our ESG approach, policies and reporting continue evolving in line with our stakeholders’ expectations, leaving no best practice behind. As for our activities’ own roadmaps, I’m particularly proud that all our activities managed to complete, and to start implementing their new sustainability strategy as part of their transformation journey. In doing so, they all address the non-financial aspects that are key for the Group – namely customer experience, people engagement and CO2 emissions - in addition to tackling their own priority areas with new ambitions and action plans.
Pursuing our focused investment approach
We are particularly happy to have kept a strong cash position during 2020. In times like these we see it as a strength, one which gives us a solid base during prolonged periods of uncertainty. At the same time, it allows us the flexibility to act rapidly when opportunities arise.
With a systematic approach and with discipline, we have continued our investment strategy during 2020, in search of a limited number of additional growth platforms. Our focus areas consistently remain centred on Business Services, Mobility Solutions, Industry & Industrial enablers, and Lifestyle goods & services. Our investment criteria, which you will find listed in this report, remain constant as well.
It is with feelings of extreme gratitude that I conclude this letter. 2020 has been a year full of unforeseen events and deep emotions. Nevertheless it has been a successful and meaningful year for D’Ieteren Group. We could not have done it without our people, at Belron, D’Ieteren Automotive, D’Ieteren Immo, Moleskine and at the Group level.
CEO D’Ieteren Group