Kimberly-Clark de México

Good day, everyone, and welcome to today's Kimberly Clark Mexico's second quarter 2023 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 star 1 on your touchtone phone. Please note that this call may be recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Pablo Gonzalez, CEO.

Thank you. Hello, everyone. I hope you're having a good summer and thanks for participating on the call. As usual, I'll make some preliminary remarks and pass it on to Javier to provide details on the second quarter results. Let me start by saying we had another good quarter. Our sales were a new record for the company, despite strong headwinds from our expert business. Both consumer products and away from home grew double digits, and in the case of the former, through a healthy balance of volume and price. On the profitability side, we also posted records and strong growth, and we reached our target margins. All in all, a strong first half to the year. Let me pass it on to Javier. Thank you.

Good morning, everyone. During the quarter, our sales were 13.7 billion pesos, a 6.4% increase versus the second quarter of 2022, and a new record. Net sales were boosted by consumer products and away from home, which grew 11.8 and 26.1% respectively. Exports were down 41.6%. Sequentially, Sales grew 1.2%, supported by volume growth, while price mix was nearly flat. Year over year, consumer products volume grew 4%. We will continue monitoring prices and volumes to find the best combination going forward. Cost of goods sold decreased 3%. Against last year, virgin fibers, fluff, and domestic recycled fibers compared negatively, while imported recycled fibers SAM and resins were favorable. Energy also compared negatively while gas was down. The FX was lower, averaging 10% less. Our cost reduction program once again had very good results and yielded approximately 450 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 increased 26% and margin was 38.2% for the fall. SG&A expenses were 10.4% higher year over year and as a percentage of sales were up 60 basis points. We continue to look forward for additional opportunities to streamline our operations while strengthening the investment behind our brands and also provisioning for higher variable compensation. Operating profit increased 40.4%, and the operating margin was 22.1%. We generated 3.5 billion pesos of EBITDA, a 31.2% increase. EBITDA margin was 25.6%, a 150 basis points sequential improvement, and a 480 basis points improvement versus the second quarter of 2022, underscoring our focus towards margin recovery. Cost of financing increased. was 381 million pesos in the second quarter, compared to 429 million in the same period last year. Net interest expense was lower, despite our incremental gross debt, because we earned more cash on our investments. During the quarter, we had a 1 million pesos foreign exchange gain, which compares to a 4 million loss last year. Net income for the quarter was 1.8 billion pesos, with earnings per share of 59 cents, a 52.9% increase. We maintain a very strong and healthy balance sheet. Our total cash position as of March, as of June 30, was 19.1 billion pesos. Our net debt to EBITDA ratio was 1.1 times, with an EBITDA to net interest coverage of eight times. Thank you.