Kimberly-Clark de México

Good day, everyone, and welcome to today's Kimber Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your touchtone phone. Please note that this call is being recorded. It is now my pleasure to turn today's program over to Pablo Gonzalez, Chief Executive Officer Sir, please begin.

Thank you. Good morning, everyone. Thanks for your participation on the call. We hope you and your families are all safe and healthy. A couple early remarks. Our second quarter results show continuous 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, a second in a row, including a monthly record in May, with stronger prices sequentially. Greater price realization, higher operating efficiencies, and solid advances in our 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 last year, as well as versus the first quarter of this year. From its lows in the fourth quarter, Our EBITDA margin has improved 300 basis points, notwithstanding the continuous cost pressures. Progress, no doubt, but we still have much to do. Our focus on greater price realization, achieving further efficiencies, and expanding our cost reduction program while aggressively innovating, investing behind our brands and 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.

Thank you. Hello, everyone. During the quarter, our sales were 12.9 billion pesos, a 10% increase versus the second quarter of 2021. Volume was down 3.1%, with price and mix contributing at 13.1%. Sequentially, volume was down 2.3%. Price was up 3%. 4.8%, and overall, our record quarterly sales increased 2.5% versus the previous record in the first quarter. Compared to last year, consumer product sales increased 7.8%, with volumes down 4% and prices up 12%. As is usually the case in our categories, when we lead price increases, we take a temporary hit in volumes while competitors fall. This time around is no exception. Sequentially, versus the first quarter, consumer products pricing increased 4% and volume remained stable. 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 12.8%, reflecting a gradual return to in-person activities. export sales grew 42.5%. Cost of goods sold increased 13.8%. Against last year, every commodity and raw material category compared negatively except for recess. POP was up in high double digits depending on the grade. Imported recycled fibers grew 70%. Domestic recycled fibers averaged high 20s and fluffed high 10s increases. On the personal care side, Superabsorbent materials were up 30% and resins were down single digits. Finally, energy compared negatively as natural gas nearly doubled. The effects was slightly lower, averaging 1% less. Our crop reduction program once again had very good results and yielded approximately 400 million pesos of savings in the quarter. These savings are mainly at the cost of goods sold available and are generated by sourcing, materials improvement, and process efficiencies. Gross profit increased 2.8%, and margin was 32.3% for the quarter. SG&A expenses were 10.4% higher year over year, and as a percentage of sales were stable. Operating profit decreased 8%. 3.4 percent and the operating margin was 16.7 percent. We generated 2.7 billion pesos of EBITDA, a 1 percent decrease versus last year, but a 6.4 increase sequentially. EBITDA margin was 20.8 percent, which is an 80 basis point sequential improvement and a 300 basis point improvement versus the fourth quarter of 2021. underscoring that we are headed in the right direction towards margin recovery. Cost of financing was 429 million pesos in the second quarter, compared to 453 million in the same period last year. Net interest expense was lower because we reduced our debt position and we earned higher rates on our cash investments. During the quarter, we had a 4 million peso foreign exchange loss, which compares to a 4 million Peso gained last year. Net income for the quarter was 1.2 billion pesos, with earnings per share of 38 cents. We maintained a very strong and healthy balance sheet. Our total cash position at June 30 was 9.7 billion pesos. Our net debt to EBITDA ratio was 1.5 times, with an EBITDA to net interest coverage of 6 times. Considering that we have approximately 10 billion pesos of debt maturities in the next three years, and in view of the current interest rate environment, we have assessed the convenience of issuing debt in advance. Consequently, we are in the process of issuing 10 billion pesos in local bonds, certificados bursátiles. Thanks, Pastor Paulo.