Kimberly-Clark de México

and welcome everyone joining today's Kimberly Clark the Mexico first quarter 2026 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 to register to ask a question at any time please press star 1 on your telephone keypad please note this call is being recorded we are standing by if you should need any assistance or It is now my pleasure to turn the meeting over to CEO, Pablo Gonzalez. Please go ahead.

Thanks so much. Good morning, everyone. Hope you're all doing well, and thanks for participating on our call. We had another strong quarter and a good start to the year with record revenue behind a strong performance in our consumer products businesses, double-digit increases in gross profit, operating profit, EBITDA, and net income. an EBITDA margin at the top end of our range. Our strategies and actions are having the intended impact. Spearheaded by strong commercial and operating execution, we continue to make progress on our KCM Plus innovation, growth, and transformation strategy. More on that after Javier takes you through our first quarter results. Javier. Thank you. Good morning, everyone. During the quarter, our sales were 14.3 billion pesos, a 3.6% increase versus the first quarter of 2025, and an all-time high. Total volume was up 3.7%, driven by consumer products, while price mix was flat. Net sales were boosted by consumer products, which grew 5.4%, with a 3.7% volume increase and 1.7% price and mixed growth, while away from home decreased 1.3%. Exports were down 6.8% due to lower hard roll sales, while converted products grew 15.8%. Sequentially, consumer products grew 1.4%, mainly volume driven, while away from home and exports grew 10.1 and 6.2% respectively. Cost of goods sold decreased 1.1%. Our cost reduction program once again had very good results and yielded approximately 450 million pesos of savings during the quarter. These savings are mainly at the cost of goods sold level. They were generated through a combination of global fiber contracting initiatives changes in sourcing and the use of alternative fibers, product redesigns and the introduction of new raw materials in non-woven fabrics, diaper geometry redesigns to improve material efficiency and logistics and distribution efficiencies across our network. These initiatives reflect ongoing actions across procurement, product design, manufacturing and logistics. In addition to these actions, compared to last year, virgin and recycled fibers, fluff, super absorbent materials, and resins compared favorably. The effects was also lower, averaging around 15% less than last year. Sorry. Gross profit increased 11.1%. SG&A expenses were 10.2% higher year over year, and as a percentage of sales were up 100 basis points. Distribution expenses were higher, while we continued to invest behind our brands and worked to improve our footprint and streamline logistics operations. Operating profit increased 11.9%, and operating margin was 23.2%. We generated 3.8 billion pesos of EBITDA, a 10.1% increase year over year, we netted a margin at 26.7% at the upper part of our long-term range. Cost of financing was 439 million pesos in the first quarter, compared to 295 million pesos in the same period last year. Net interest expense was higher since we earned less on our cash investments. During the quarter, we had a 9 million peso foreign exchange loss, compared to a 14 million pesos gain last year. During the quarter, in early March, considering that maturities of recent years have been paid from cash, we issued certificados for 10 billion pesos through two placements. The first placement was for 8 billion pesos with equal amortizations in years 10, 11, and 12, and the second placement was for 2 billion pesos with a 2.6 year term. This allowed us to benefit from favorable conditions and improve our debt maturity profile. Net income for the quarter was 2 billion pesos, a 10.2% increase. Earnings per share were 68 cents, a 13.3% increase. We maintained a very strong and healthy balance sheet. Our total cash position of March 31st was 20.4 billion pesos. Our net debt to EBITDA ratio was 0.9 times with EBITDA to net interest coverage of nine times. With that, I turn that to Paolo. Thank you. As mentioned, we had a strong start to the year despite still subdued economic growth and private consumption. We expect growth to improve as the year progresses spurred by job creation and higher salaries. together with increased spending and anticipation of and during the roll-out. We expect consumer products businesses to continue to lead the way, professional business stabilizing during the second quarter and growing during the second half of the year, and parent-grown sales still trailing due to more tissue required for consumer product sales, but becoming less of a drag as the year goes on. With respect to raw material costs, Fundamentals support lower dollar prices versus last year, but we will experience some months of higher costs both sequentially and in some cases versus last year, stemming from the oil shock the world is experiencing. We hope the impact will be limited in both strength and duration, with prices returning to underlying market fundamentals. In the meantime, we're focused on price realization, We've just implemented price increases in most of our businesses, averaging 4%, and we'll continue to apply our revenue growth management capabilities, and we'll continue to be focused in operational efficiencies and ensuring another good year in cost reduction efforts. Of greater importance, we continue to make good progress on our KCM Plus strategies. Our core businesses are performing well, and our diamond categories are accelerating growth behind consumer-centric, relevant, and differentiated innovation, together with greater engagement and improved commercial execution. Further, we're making inroads in private label and have identified opportunities to strengthen the North American supply chain together with our strategic partner. When it comes to new areas of growth, in the coming quarters we will be working to consolidate and to increase efficiencies in adjacencies. Further, we continue to make progress on pet food, and are actively analyzing the CanVue opportunity. All in all, our KCL Plus initiatives focused on accelerating growth are going well. Equally important, we have specific initiatives to develop our skill set, better utilize data to define consumer needs and engagements, work closely with our retail partners to remain a supplier of choice, and continue to improve and, where needed, transform our end-to-end cost structure in an increasingly dynamic environment. Effectively deploying and efficiently utilizing the most advanced technology solutions is the fundamental layer to support and drive all these efforts in times of the essence. We hope these comments provide a good picture of where we stand and why we are so excited about KCM's present and future. With that, let me open the call for questions.

Thank you. If you would like to ask a question, please press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star and 1 to ask a question. I will pause for a moment to allow everyone a chance to join the queue. We'll take our first question from Ben Sur with Barclays. Please go ahead. Your line is open.