Kimberly-Clark de México

Good day everyone and welcome to the Kimberly Clark Mexico's first quarter 2022 earning school. At this time all participants are in a listen only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions at any time by pressing the star and one on your touch down phone. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded and I will be sending by should you need any assistance. It is now my pleasure to turn the conference over to the CEO, Pablo Gonzalez.

Thank you. Good morning, and thanks everyone for your participation on the call. We hope you and your families are all safe and healthy. A few brief remarks. Our first quarter results represent a significant improvement as we increase top line, bottom line, and margins versus the previous quarters. We're on the right track and expect to continue delivering better results as the year progresses. We achieved record net sales for a quarter, including a monthly record in March, and both our prices and volumes were stronger sequentially. Our pricing actions improved operating efficiencies and solid advances in our continuous cost reduction efforts outpaced the raw material sequential cost inflation and we were able to improve our profits and margins versus the third and fourth quarters of the last year by a double-digit margin in the case of the latter. Progress, no doubt, but our results are still lower than last year, and we still have much to do. Our focus in greater price realization, achieving further efficiencies, and expanding our cost reduction program, while aggressively innovating, investing behind our brands in state-of-the-art technology, and strengthening our shares, is steadfast. I'll share more details on each of this after Javier provides a review of our results. Good morning.

During the quarter, our sales were 12.6 billion pesos, a 3.8% increase versus the first quarter of 2021. Volume was down 3.5%, with price and mix contributing 7.3%. Sequentially, volume was up 3%, price was up 4%, and overall, our record sales increased 7% versus the fourth quarter of last year. Compared to last year, consumer product sales decreased 0.9%, with volumes down 7% and prices up 6%. As is usually the case in our categories, when we lead price increases, we take a temporary hit in This time around is no exception. However, pricing increased 5% and volume increased 4% to add up to a 9% sequential improvement from the fourth quarter. And our market shares are coming back. Given the cost pressures, we will continue to focus on price realization and we will continue monitoring prices and volumes to find the best combination going forward. Away from home product sales increased 12.4% reflecting a gradual return to in-person activities. Export sales grew 51%. Sales of finished products continued growing at a very good pace, increasing by more than 20%. Cost of goods sold increased 16%. Against last year, every commodity and raw material category compared negatively. Fault was up approximately 30%, depending on the grade. Imported recycled fiber prices grew close to 70%, and domestic recycled fibers and fluff averaged high in increases. On the personal care side, superabsorbent materials were up 50%, and resins up low teens. Finally, energy compared negatively, while natural gas compared positively, given last year's February winter storm. The FX was slightly higher, averaging 1% more. Our cost reduction program once again had very good results and yielded approximately 300 million pesos of savings in the quarter. These savings are mainly at the cost of goods sold level and are generated by sourcing materials improvement and process efficiencies. Gross profit decreased 15.5% and margin was 31.3% for the quarter. SE&A expenses were 0.65% higher year-over-year. and as a percentage of sales were 50 basis points lower. Operating profit decreased 26.8%, and the operating margin was 15.9%. We generated 2.5 billion pesos of EBITDA, a 22.4% decrease versus last year, but a 20.4% increase in the equation. EBITDA margin was 20%. which is a 220 basis points sequential improvement, underscoring that we are on the right track towards margin recovery. Cost of financing was 419 million pesos in the first quarter, compared to 422 million in the same period last year. During the quarter, we had a 4 million pesos foreign exchange loss, which compares to an 18 million pesos gain last year. Net income for the quarter was 1.1 billion pesos with earnings per share of 36 cents. We maintained a very strong and healthy balance sheet. Our total cash position at March 31st was 12.4 billion pesos. Our net debt to EBITDA ratio was 1.5 times with an EBITDA to net interest coverage of 5 times. Thanks. Back to Pablo.