Kimberly-Clark de México

And welcome to today's Kimberly Clark Mexico's 1Q24 Earnings Conference Call. 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 a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and two. Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Pablo Gonzalez, CEO.

Hello, everyone. Thanks for participating on the call, and we hope your year is off to a great start. As usual, I'll make some preliminary remarks and then pass it on to Javier to provide some details on the first quarter results. We had a good start to the year, particularly on margins and bottom line growth. Net sales, EBITDA, and net income were all quarterly records. Let me first provide some perspective on the top line. Our consumer products business grew low single digits versus a strong comparison driven by the implementation of price increases during the first quarter of 2023 and the corresponding volume protection by clients, as well as Holy Week landing in March this year as opposed to April of last year. Holy Week is traditionally a slow sales period in our categories. However, when compared to the fourth quarter of 2023, that is sequentially, growth in the first quarter was 6% with a healthy 3% increase in volume. Professional posted mid-single-digit growth, and experts of finished products achieved very strong double-digit growth, albeit from a low base. On the contrary, tissue parent rolls, once again, decreased substantially and were roughly half those of last year. This was due to increased internal tissue consumption and significantly lower prices because of excess capacity in the Far East and the lower exchange rate. This hard-rolled sales decrease impacted our top line by more than 400 million pesos and roughly 300 basis points. It's important to point out that the negative impact for this line of business will be lower in the second quarter and reverse during the second half of the year. All in all, our consumer and professional businesses continue to perform well, with healthy volume and strong shares, And first quarter total sales were a new record for the company. On the bottom line, we again posted important increases and continued to improve our margins. This result from a combination of higher volume and efficiencies, better raw material prices, and continued progress on our cost reduction efforts. Let me pass it on to Javier to provide details on the quarter. Thank you.

Good morning, everyone. During the quarter, our sales were a record 13.8 billion pesos, a 1.8% increase versus the first quarter of 2023. Total volume was up 0.6% and price mix 1.2%. Net sales were driven by consumer products and away from home, which grew 3.4% and 5.8% respectively. Year over year, consumer products volume was down 0.3%, while price mix was up 3.7%. Exports were down 17.2%, dragged by lower hard-rolled sales. Converted product exports showed again very important improvement and grew 76.1%. Cost of goods sold decreased 8%. Against last year, virgin and recycled fibers SAM and fluff were favorable, while resins compared negatively. The FX was lower, averaging 10% less. Our cost reduction program once again had very good results and yielded approximately 360 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 efficiency. Gross profit increased 18.4% and margin was 42.3% for the quarter. SG&A expenses were 13% higher year over year and as a percentage of sales were up 181 basis points. Distribution expenses are up and we have strengthened the investment behind our brands. We are investing to improve our footprint and streamline our logistics operations. Operating profit increased 22.2% and the operating margin was 24.7%. We generated a record 3.9 billion pesos of EBITDA, a 19.3% increase. EBITDA margin was 28.2%, a 50 basis points sequential improvement and a 410 basis points differential versus the first quarter of 2023. underscoring our focus on achieving strong margins. Cost of financing was 315 million pesos in the first quarter, compared to 415 in the same period last year. Net interest expense was lower, since we have less net debt. During the quarter, we had a 1 million peso FX gain, which compares to a 21 million loss last year. Net income for the quarter was 2.1 billion pesos, with earnings per share of 68 cents, a 29.1% increase. We maintain a very strong and healthy balance sheet. Our total cash position as of March 31st was 20.2 billion pesos. Our net debt to EBITDA ratio was 0.8 times, with an EBITDA to net interest coverage of 10 times. With that, I turn it back to Pablo. Thank you.