Kimberly-Clark de México

Excuse me, everyone. We now have all of our speakers in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. Instructions for asking questions will be given at that time. I would now like to turn the conference over to Mr. Pablo Gonzalez, CEO. Please go ahead.

Pablo Gonzalez Good morning, everyone. I hope everyone is safe and healthy. Let me start by saying that we're very pleased with the progress we've made on our priorities and operating guidelines to navigate through the current environment with our second quarter results. Despite an extremely complicated environment on many fronts, we delivered strong top and bottom line growth and increased margins. With respect to our priorities and operating guidelines, We implemented a large number of measures and actions to protect the health of our employees and their families, our number one priority. And we have worked with the authorities and communities to assist during the pandemic and mitigate its impacts. Also, we took several actions to guarantee our continued operation, as well as that of our suppliers, to ensure all our customers and consumers have access to our products, all the while ensuring we become more efficient in every aspect of our operation to deliver the best possible results and generate and protect cash. Our consistent and good execution in these priorities enabled us to take good care of our workforce, provide support to those in need, continue operating efficiently, and again, deliver strong results. On the sales front, despite private and B2B consumption being severely affected by the COVID lockdown and its impact on the economy, our strong growth reflects the fact that several categories performed well, particularly those related to personal hygiene, health, and protection, and that we capitalized on new growth opportunities. Altogether, our top line grew for the 23rd consecutive quarter through a combination of volumes, price, and mix. On the cost side, most raw materials prepared positively, and together with our increased productivity and very good results on our cost reduction program, allowed us to deliver strong bottom line growth and improve margins year over year in spite of the significant peso depreciation. In summary, a good quarter in a very complicated health, economic, and consumer environment. Javier will provide more details on the quarter's results.

Hello, everyone. During the quarter, our sales were 12.3 billion pesos. a new record and a 9% increase versus the second quarter of 2019. Volume grew 5% while price and mix were 4% higher. Consumer products, which include sales of our affiliate companies, posted an 11% increase. Away-from-home product sales were down 42%, a significant contraction as offices, hotels, and restaurants shut down. Our exports business performed very well with sales growing 64%. Cost of goods sold increased 7%. Against last year, pulp, fluff, superabsorbent materials, and resins compared favorably in dollars, as did domestic fiber prices. Imported recycled fiber and energy prices compared negative. Finally, EFX was significantly higher, averaging 21% more. The cost reduction program had very good results and yielded approximately 600 million pesos of savings in the quarter. Gross profit increased 12.4% and margin was 38.3% for the quarter. The GNA invested was in line with that last year and as a percentage of sales was 150 basis points lower. Leveraging our top line growth and reflecting our emphasis on improving our investments in advertising and point of sales efficiency, while reviewing the expenses and supply chain costs across the board. Operating profit increased 23%, and the operating margin was 22.9%. During the quarter, we generated 3.3 billion pesos of EBITDA, a 19% increase, and the EBITDA margin was 27%. Cost of financing was 401 million pesos in the second quarter, compared to $379 million in the same period of last year. Net interest expense was lower, as our net debt position has been reduced. In the quarter, we had a $33 million foreign exchange loss, which compares to a $20 million gain of last year. Accordingly, net income for the quarter was $1.6 billion, a 22% increase. Earnings per share were $0.52. We ended the quarter with a strong balance sheet at EBITDA, efforts to improve working capital, and our strategy to protect cash have translated into significant cash generation. Our cash position was 10.3 billion pesos, and net debt represented 11.9 billion, with a net debt to EBITDA ratio of 0.98 times. In July, the company placed $500 million dollars 144A Regex Senior Unsecured Note at 2.431% with partial maturities of one-third each in years 2029, 2030, and 2031. This so-called soft wallet structure minimizes refinancing risk. Needless to say, we entered into a related swap agreement to hedge the currency risk Both the principal and the interest are converted to PEDS. The funds will initially and primarily be used to pay down debt during late 2020 and early 2021. With this placement, we doubled our debt profile average life. We were very pleased with the spread, coupons, and demand for our debt. Finally, as you may know, our affiliate, 4E, is voluntarily recalling its hand sanitizer in the U.S., due to the potential presence of methamphetamine. We will support 4E in doing what's necessary to comply with all FDA requirements. With that, I'll turn it back to Paulo.