Alicorp S.A.A. (ALICORC1) Earnings Call Transcript & Summary

Good morning, and welcome to Alicorp's conference call. [Operator Instructions] It is now my pleasure to turn the call over to Rafael Borja of i-advize Corporate Communications. Sir, you may begin.

Thank you, and good morning, everyone. We are very pleased that you could join us today. From Alicorp, we have Mr. Alfredo Perez, Chief Executive Officer; Mr. Juan Moreyra, Chief Financial Officer; and other members of the management team. Today, they will be discussing the fourth quarter 2020 results after the press release issued by the company yesterday. If you have not yet received a copy of the earnings report, please visit www.alicorp.com.pe, where there is also a webcast presentation to accompany discussion during this call. If you need any assistance, please contact i-advize in New York at (917) 710-4806. Please be advised that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. If you're a member of the media and wish to direct any questions to the company, please contact the company directly after the call. Before we begin, I would like to remind you that forward-looking statements may be made during this conference call, and they do not account for economic circumstances, industry conditions, the company's performance or financial results. As such, these forward-looking statements are based in several assumptions and factors that could change causing actual results to materially differ from the current expectations. Thus we ask that you refer to the disclaimer located in the earnings release prior to making any investment decision. It is now my pleasure to turn the call over to Mr. Alfredo Perez, Chief Executive Officer of Alicorp, who will begin the presentation. Alfredo, please go ahead.

Thank you, Rafael, and good morning, everyone, and welcome to Alicorp's 2020 Full Year Earnings Call. Once again, we would like to start our call wishing you and your families remain safe and healthy. As we are presenting from our respective homes, we kindly ask you to bear with us if things do not run as smoothly as you would normally expect. 2020 was a year far from normal. In an unprecedented environment, we had to decide what would be the best way to live up to our purpose of feeding a better tomorrow as a company. Our first priority will always be to protect our employees in the frontline. But at the same time, we remain committed to help our communities overcome the crisis and walk the path to recovery, together with our clients. The managerial teams of our different business units showed strong resilience and agility adapting quickly, constantly changing circumstances, reflecting thoroughly on the strategic implications of the new reality. It was time to leverage the capabilities that we have been developing over the past few years. Prioritizing and accelerating innovations and digital initiatives, bringing us closer to the needs of our clients and consumers and consolidating our leadership in most of the markets where we participate. After a challenging year, like 2020, we'd like to take a step back and look at how far we have come. The indicators on Slide 5 show our solid growth over the last 5 years, not only in terms of sales, but also in terms of profitability, in line with our corporate strategy and above what we see in the case of many of our LATAM peers. None of these would have been possible without the hard work of our talented teams, which are one of our strategic pillars, and our solid organizational health that has supported us throughout the years and especially during these challenging times. Not only are we recognized by our organizational culture but also by our culture of giving back, being granted Merco's corporate responsibility and governance 2020 award, where we were ranked first among Peruvian companies, an acknowledge for our commitment to help the sanitary crisis. We're also very excited about the work we're doing in the innovation and digital transformation fronts, which constantly create new sources of differentiation, allowing our growth to be sustainable in the long term. Also, our financial discipline has helped us to manage a significant COVID-related cost incurred during the year, while maintaining the financial strength of our company. Let's move on to Slide 6 to briefly review the Latin American macroeconomic environment. Comparing a social COVID crisis in 2020 has no precedent in recent history. The economic recession of local currency devaluations extended over all of the significant geographies where we operate without exception, affecting some more than others. The Peruvian economy was hit especially hard since it implemented one of the most strict and prolonged lockdowns during the first COVID-19 wave. In addition, in the fourth quarter, the political instability and social unrest that led to a change of government represented an additional source of uncertainty for the country and included roadblocks that led to supply chain disruptions, mainly impacted us on the distribution side. Let's now discuss our consolidated results for the fourth quarter of 2020 on Slide #7. Consolidated revenue and volume grew 7.6% and 4.2%, respectively year-over-year in the fourth quarter of 2020, mainly driven by double-digit growth in our Consumer Goods Peru, Bolivia and Ecuador business units as well as a 96% growth in Peruvian soles in our Crushing business. Regarding our Consumer Goods International unit, the very strong performance in the Andean region was partially offset by price restrictions in Argentina and the devaluation of the Brazilian real. On the contrary, COVID-19 restrictions continue to impact our B2B and Aquafeed units. Let's move to Slide 8 to review our consolidated revenue for the full year of 2020. Despite all the challenges in 2020, Alicorp delivered positive growth. Consolidated revenue and volume grew 2.6% and 0.8%, respectively, showing a clear contrast between business segments. Our Consumer Goods businesses showed very solid results on the back of higher demand for food staples and hygiene products. It is worth highlighting that the Consumer Goods Peru performance includes the negative impact from the production disruption we faced during the second quarter of 2020. Also, our Crushing business showed a positive performance benefiting from the improvement in the commodity cycle. On the other hand, COVID-19 had material negative impact on the performance of our business units that cater to the other businesses, such as our B2B and Aquafeed businesses. Moving on to profitability, let's now review our consolidated EBITDA for the fourth quarter of 2020 on Slide #9. Consolidated EBITDA fell 21% for the quarter compared to 2019. In addition to the impact from lower sales and in the B2B and Aquafeed units, we started seeing pressure in gross margin from higher commodity prices. Moreover, the devaluation of local currencies represented an additional source of cost increases. COVID-related costs and expenses in the quarter amounted to PEN 19 million, mainly related to transportation and additional plant workers. It is worth noting that COVID-related cost and expenses have reduced continuously since the first quarter. We expect COVID-related cost and expenses to remain more or less stable or improve slightly for the next few quarters versus what we saw in this fourth quarter as Latin America is currently facing a second COVID-19 wave. In the case of SG&A, we've incurred additional expenses that we will further discuss when we cover the individual business units. Let's move to Slide 10 to show you briefly our consolidated EBITDA for the full year of 2020. Consolidated EBITDA decreased 11% in 2020, while EBITDA margin decreased 11.2% as a result of lower profitability in our B2B and Aquafeed businesses. As explained in previous calls, both segments have exposure to out-of-home consumption and were significantly impacted by the restrictions implemented to fight the pandemic. The factors that impacted EBITDA in the year were the COVID-related cost and expenses. This was partially offset by the positive performance of the Consumer Goods and Crushing business units. As you can see on Slide 11, net income suffered a significant decline year-over-year in the fourth quarter and in the full year, mainly explained by a lower operating income. Let's turn to Slide 12, please. As we mentioned in our last call, we'd like to take this space to give you a brief update on certain aspects of our corporate strategy. Today, we want to touch on our growth pillar by giving you an update on the integration of our most recent acquisitions, Fino and SAO in Bolivia and Intradevco in Peru, as well as our efficiency pillar by giving you an update on our migration to the SAP S/4HANA platform. Let's turn to Slide 13 to review the results of our Fino and SAO acquisitions we acquired. We're happy to share that integration of Fino and SAO is on track. Value creation is above our acquisition business case. In the case of Consumer Goods business, we SAO have outperformed our initial business case, even with onetime restructuring expenses and lower edible oil prices, due to legal restrictions on price increases in Bolivia that have impacted our results. We have achieved very positive results on both the commercial and marketing fronts with powerful detergent launches that have permitted material market share gains as well as new categories such as cereals and our launch into the food service/B2B space. On the administrative and financial fronts, lower financial cost and working capital improvements were also achieved. Moreover, market share in detergents and margarines increased by 1.5 percentage points and 2.6 percentage points in 2020, respectively. Finally, we have diversified our portfolio entering new categories, such as cereals, cookies, launching new products such as our Nutregal pasta and Opal detergent. In the case of the Crushing business, the results follow the lower prices in the commodity cycle, resulting in lower crush margins during this period of time since acquisition. However, the recovery that we see towards the end of 2020 with solid fourth quarter results is a reflection of the higher commodity cycles that we now find ourselves in and should be positive for the business in 2021. Additionally, we have seen very positive results as part of our integration process and synergy capture, especially in our logistics and commercial initiatives. Let's move on to Slide 14 to review the results of our Intradevco acquisition now. We're happy to share that the integration of Intradevco is also on track, and value creation is above our acquisition case. During 2020, we continue with our integration plan to generate value and consolidate our household care and personal care platforms. In Peru, through the commercial and distribution synergies and strategies, we managed to capture higher demand for cleaning and hygiene products resulting in improvement in sales growth and market share gains in categories such as surface cleaners, with an impressive 8.1 percentage point market share gain in 2020; skincare, up 4.1 percentage points share; dish washing soap and bleach. Additionally, we successfully revamped our Sapolio brand under the new concept of La Liga de la Limpieza, covering the 5 main categories with the objective to overcome specific marketing challenges in 1 -- in each 1 of them, a strategy that resulted in market share gains in almost all the categories we play. We also relaunched our dental brand within the personal care category. With a new image highlighting its high quality and excellent results in our modern channel achieved historically high market share of 18%. In our Consumer Goods International business, we focus on an aggressive expansion plan for our Sapolio brand and portfolio throughout the Latin America region, increasing distribution and household penetration in multiple categories, which translated into notable sales growth in Ecuador, up 16% year-over-year; Colombia, which more than doubled; Chile, over 29%; and Central America and the Caribbean over 54%, while exploring opportunities in new markets like Mexico. All in, sales growth at Intradevco portfolio was 23% versus 2019. In terms of EBITDA generation, given the combination of synergies that we were able to capture in 2020 and the performance of the underlying business, we managed to grow 6% compared to our business case despite COVID-related expenses and achieved an important increase of 17% compared to 2019. Without those COVID-related expenses, we would have had double-digit growth against our business case. Let's move on to Slide 15, where we share an update on our migration to SAP S/4HANA. As we commented last year, since 2017, we are embarked on a multi-annual ERP transformation to enhance our capabilities and ensure the sustainability of our business. We are happy to share that in 2020, until the beginning of 2021, with the support of more than 400 talented professionals from inside and outside Alicorp, we launched our migration to S/4HANA in the consumer and B2B businesses in Peru, involving 2,600 users. This is especially good news in the challenging context in which we achieve this migration working remotely without experiencing any sales or production disruptions. The operating units, which have gone live, thus far represent approximately half of Alicorp's annual sales. We have already gone live with our sales, finance and accounting and supply chain and human resource modules and will work on the stabilization of this new tool throughout the year. Let's move on to the next section to discuss the operating results of our operating businesses as well as how the market dynamics of each have changed in the context of COVID-19. Patricio Jaramillo, our VP for Consumer Goods Peru and Corporate Innovation, will begin with Consumer Goods Peru on Slide 16. Patricio, please go ahead.

Thank you. Alfredo. Let's begin with an update on Consumer Goods Peru market dynamics on Slide 17. Due to the negative effects of COVID-19, the Peruvian GDP is expected to decline around 11% in 2020 with quarter 4 down 2% compared to 2019. Private consumption is also expected to decline in 2020 due to the impacts of lockdowns on unemployment and family income. In spite of this, we continue to see persisting trends of higher at-home consumption, cleaning and personal hygiene habits adopted during the pandemic, driving double-digit category growth. Although we continue to see reductions in the number of shopping trips to stores per month, most categories report increased volume due to higher tickets per purchase, up more than 50% compared to last year. However, tiering down is affecting some categories, such as edible oils, pastas and detergents due to the ongoing economic crisis. Regarding our channel mix, we have seen a recovery in our traditional trade channel share, now similar to the pre-pandemic mix. As mentioned before, we have restored our production capacity in Peru over the last 2 quarters. And with that, we continue to recover market shares. As of our November, December reading, more than 85% of our categories grew or maintained share versus May, June, aided by increased marketing and innovation efforts during the quarter. [Technical Difficulty] aimed at regaining our market position and recognition among our consumers of their superior quality and competitiveness of Alicorp's brand. It is worth highlighting that our surface cleaner brand, Sapolio, has reached a historical high of 54% market share. Finally, in November 2020, we acquired ADM SAO edible oils brand portfolio in Peru, which strengthens our presence in this category, expanding our portfolio of brands with Aval, SAO and MIRASOL. These have combined a 4% average market share as of September, October reading. For next year, Peru is expected to have a GDP growth of approximately 10%, recovering 90% of the economic contraction faced in 2020 due to the pandemic. Unfortunately, the country is facing a second wave of COVID-19 cases, and the government has established differentiated quarantines per region. In these turbulent times, we continue to stand side-by-side with our clients, maintaining our flexible and agile nature adapting to these new circumstances with a clear responsibility of assuring product supply to millions of households. Let's move on to performance of our Consumer Goods Peru unit on Slide 18. Fourth quarter revenue increased 11% year-over-year with gross margin at 31.1%, down 0.5 percentage points due to higher cost and COVID-related expenses. Full year revenue grew 7%, as our good performance reported in the first, third and fourth quarters more than offset the impact from production disruptions we experienced during the second quarter. It is worth highlighting the 62% growth of our personal care platform behind higher demand for liquid soaps and sanitizing gel. Furthermore, our household platform grew 34% due to a higher demand for stain cleaners, surface cleaners and bleach. Full year gross margin fell 1.3 percentage points year-over-year mainly explained by higher raw material costs, higher COVID-related costs and higher transportation costs in the last quarter due to the roadblocks Alfredo mentioned before. These impacts were partially offset by higher prices and volumes sold. Excluding COVID-related costs, our gross margin would have grown 0.7 percentage points, reaching 34.8% for the year. Full year 2020 EBITDA increased 6% year-over-year and EBITDA margin reached 19.1%. Excluding COVID-related costs and expenses, EBITDA margin would have increased 1.9 percentage points for the year, reaching 21.2%. Finally, Intradevco continues to post strong results, up 26% in volume, 27% in revenue and 46% in EBITDA for the full year, reaching PEN 143 million in EBITDA in 2020. Now let me pass the floor over to Juan, who will discuss the operating results of the rest of our businesses.

Thank you, Patricio. Let's move to Slide 19, B2B: Update on Market Dynamics. The restaurant industry has shown a slow recovery of [Technical Difficulty]

Please standby. You are expecting technical difficulties. Please remain on the line.

Let's move on to Slide 19, B2B: Update on Market Dynamics. The restaurant industry has shown slowed recovery over the last few months, while our food service business has performed better than the Peruvian restaurant GDP with a reduction of 19% year-over-year versus a close to 50% reduction of the restaurant gross domestic product. This better performance was a result of, one, a precise customer segmentation strategy; two, being closer to our customers to support them with recovery plans, while focusing on accounts receivables; and three, our team who showed strong focus and dedication despite a challenging context and environment. In terms of customers reopening, as of year-end, the number of our B2B clients that are active has already reached 76% of pre-COVID levels, and we have seen accounts receivables recovering at a faster pace than expected. We estimate that the customers that have not reopened their operations thus far have changed their businesses or will not recover. We are now focusing on prospecting the market as we expect more new entrepreneurs to enter it. Alicorp has been able to increase market share in most of its main categories, thanks to our customer-focused approach as well as the fast adoption of digital tools such as B2B marketplace, Ali Soluciones. In this context, we believe that it is our responsibility to lead the B2B digital transformation to offer complete solutions to our customers and support their recovery. That is why we have been working, not only on the implementation of our marketplace, which already has 4,000 active clients with a total revenue of PEN 53 million during 2020, but also on developing a digital ecosystem that includes a broad portfolio, digital solutions for consumers, such as ERP, cashless solutions, digital forums where we share knowledge and provide technical assistance and financial services. This has been designed with a customer-centric view to support our customers' recovery, joining with different partners, such as Vale and MiBanco. Let's move on to Slide 20, B2B quarter four 2020 performance. Revenue decreased 7% this quarter compared to last year due to COVID-19 impact on our food service and bakery platforms. It is important to mention that our food service platform showed a recovery of 6% in the top line compared to the third quarter of 2020 on the back of the reopening of most of our clients and our digital initiatives. However, our bakery platform decreased 8% due to an aggressive price competition in the market. Full year results showed a decrease of 8% year-over-year, highly impacted by COVID-19, including the initial full lockdown that occurred during the second quarter. Regarding full year profitability, the impact of COVID-19 on the food service sector and the higher commodity prices resulted in a gross margin decline of 7 percentage point compared to last year. Gross margin decreased 1 percentage points in the fourth quarter compared to the third quarter, impacted by bakery volume losses and higher commodity prices, offsetting the benefits of our food service platform from a flight to recovery. We continue to see a sharp year-over-year decline in EBITDA this quarter, explained by the lower gross profit, COVID-related expenses and higher logistic expenses related to inventory needs in preparation for our migration to the SAP S/4HANA platform. Let's move on to Slide 21, Consumer Goods International quarter 4 performance, in order to give you a snapshot of our business. Our Consumer Goods International business showed another strong quarter, with both volume and revenue up 4% year-over-year. This caps a positive 2020 with a strong top line growth in the Consumer Goods International business, with the volume growing 7% and revenue 9% for the full year. Top line growth in the quarter and in the full year was fueled by market share gain, increasing share in 11 of the 12 categories we measure in our main geographies as well as innovation and successful launches such as our entrance into the Tier 3 pasta category in Bolivia and Ecuador, cookies in Ecuador and household cleaners in Argentina, just to name a few. EBITDA for the fourth quarter was PEN 21 million, an 81% increase year-over-year. It is important to note that there were onetime impacts in both the base and current period such as the impairment of our Brazil and Argentina operations, up PEN 37 million in quarter 4 2019 and nonrecurring expenses of PEN 24 million in quarter 4 2020, which include COVID-related expenses, expenses related to the final phase of our restructuring program in Bolivia as well as to the closure of our manufacturing facility in Uruguay that came with the Intradevco acquisition. For the full year, EBITDA grew 16% on an all-in basis and 21%, excluding impairments on both periods. Now let's move to Slide 22 to cover the highlights of our main international geography. Bolivia delivered another quarter of strong top line growth with revenue up 20% behind innovation and market share gains in our detergents, pasta and margarine categories. Our marketing and go-to-market strategies continue to yield penetration and loyalty for our brands among Bolivian consumers resulted in revenue growth of 18% full year. Ecuador also delivered solid top line growth, with revenue up 23% for the quarter and 19% for the year on the back of innovation and market share gains in our pasta, sauces, cookies and crackers and household care businesses. In Ecuador, we recently announced a distribution agreement with La Fabril, Ecuador's top edible oils company, which gives us significant go-to-market capabilities to reach more stores and consumers all over the country. In Brazil, pricing actions and volume growth resulted in a 6% year-over-year revenue growth for the quarter and 9% for the year in the Brazilian reais. However, devaluation of the real resulted in a decline in revenue in Peruvian soles. EBITDA was impacted by the impairments both in quarter 4 and quarter 1 2020. However, excluding this 1 and nonrecurring expenses, we continue to see the positive outcomes of our successful efficiency program, achieving an SG&A over sales ratio of 27% for this geography, down from the 34.5% achieved in 2019. Finally, in Argentina, price controls led to an EBITDA margin contraction, totaled 37% year-over-year devaluation, which could not be fully offset. Revenue for the full year, however, grew a healthy 14% on the back of volume growth and pricing actions and hedge inflation prior to the pandemic. We also have achieved great results on our efficiency program in Argentina, reaching an 18% SG&A over sales ratio in 2020, down from almost 25% achieved in 2019. EBITDA in Argentina for the full year grew 25x versus 2019 with our record EBITDA margin of 8.3%.

Patricio, hi. This is Juan. I'm back. If I should continue?

Go ahead, Juan.

Okay. Thank you, Patricio. Let's move on to Slide 23, the Aquafeed market dynamics. In Ecuador, shrimp exports reached double-digit volume growth in Q4, mainly influenced by a peak in November to meet the Chinese New Year demand, closing in 2020 with a 7% increase in export volume, while diversifying export markets in the U.S. and Europe and, consequently, reducing its concentration on the Chinese market. International trade for shrimp is improving and slowly recovering, but is still below previous years, as China maintained high inventories due to COVID restrictions in restaurants where seafood is mainly consumed. Furthermore, shrimp prices continue at a 10-year low, resulting in farmers still filling low-cost feed brands as well as longer and more aggressive credit terms to which competitors have responded by offering premium products at mainstream prices. Faced with this environment, we have focused our strategy in 2 key areas: first, keeping a financially healthy client portfolio limiting our collection risk by not matching the longer credit term currently offered by competitors in the market; and second, redefining our go-to-market strategy with cohesive farmer-centric solutions, which we will discuss in further detail on Slide 25. Our new strategy aims to better position us ahead on the market turnaround. Regarding the salmon feed business, exports of salmon from Chile are expected to grow at around 6% in volume in 2020, thanks to the recovery of demand in the U.S. in the fourth quarter. Up until November 2020, the salmon industry saw a steep drop in prices below breakeven for farmers, which led them to leave their feed consumption and reduced planting. However, in December, prices bounced back and farmers are seeing positive returns. Tenders for future feed purchases have been reactivated, but are expected to be awarded at reduced prices. In order to win in this highly mature and consolidated market, we are deploying a contracyclical strategy with the relaunch of our salmon food brand based on high quality supported by the experimental center, additional manufacturing capacity, agile services and the launching of PatagonIA, our advanced analytics tool. Let's move on to Slide 24, Aquafeed performance. In terms of business performance, the 25% revenue drop in the U.S. -- in U.S. dollars is mainly explained by both of our business units and price reductions in the shrimp unit, as mentioned before, which is reflected in our yearly performance as well. Gross margin decreased 5.9 percentage points in the quarter at 2 percentage points due to price reductions, gearing down in Ecuador and higher raw material costs. Both the fourth quarter and the full year EBITDA saw a sharp decline, mainly as a result of lower gross profit. Also, the lower SG&A dilution due to volume reduction represent a further reason for the margin squeeze. As a measure to improve declining gross profit and in response to increasing raw material prices, we implemented pricing actions in December. Now let's move on to Slide 25 to tell you a little bit about the trends we see in the Ecuadorian shrimp industry and how we are responding to them. Regarding shrimp production in Ecuador, today, the industry is going through an important transformation that will most probably be an inflection point for the future. Farmers are very focused on sustaining volume growth with profitable margins placing great emphasis on the search of cost efficiencies and productivity. Throughout 2020, farmers have increased productivity level through new tools. In order to respond to the new trends in the market, we are currently deploying our new farmer-centric go-to-market strategy, which includes new product launches focused on multiphase systems to better monitor weekly shrimp growth, the implementation of these tools, including the financing of automatic feeders to our client and a new customer engagement strategy. The new cost efficiency obtained by Ecuadorian shrimp farmers, coupled with solid fundamentals, leads Ecuador best position to capture global market shares as soon as exports return to their normal level, which we estimate a low double-digit annual growth in the coming 5 years. Finally, let's discuss the performance of our Crushing business on Slide 26. The Crushing business had a remarkable fourth quarter due to the positive commodity cycle and the base effect of social unrest in Bolivia in Q4 2019. Volumes sold increased 40% year-over-year, including sales to third-party and internal consumption, while revenue increased 77% year-over-year in U.S. dollars. Finally, EBITDA increased 64% in dollars as revenue growth was partially offset by the expenses related to the implementation of our efficiency program in Bolivia. Let's move to Slide 28 to discuss liquidity and our strong balance sheet. Regarding Alicorp's debt metrics, as of the fourth quarter of 2020, our net debt-to-EBITDA ratio increased to 2.7x from 2.3x as of the Q3 2020. This increase is mainly explained by a lower EBITDA over the last 12 months as a consequence of the COVID-related impact. By the end of 2020, despite the material impact on EBITDA as a consequence of the pandemic, we managed to keep financial leverage below 3x, and we focused our efforts on optimizing our debt and liquidity levels in a lower interest rate environment. Let's move to Slide 29, please. Regarding our liquidity levels, as of December 2020, we have repaid approximately PEN 199 million of short-term debt in order to close the year with an optimal cash position level. As a result, we closed the year with PEN 571 million in cash, which represented a debt coverage of the principal of debt maturing over the next 12 months of 1.24x. Additionally, we maintained available and committed trade lines of $1.4 billion and have looked to issue debt securities in the Peruvian market under our local bond program for PEN 1.6 billion. Our active focus on improving working capital continues delivering good results. The average last 12-month cash conversion cycle reached 16 days as of Q4 2020, 3 days less than the last quarter and about 18 days less when compared to the same period of 2019. Even in the current context of the COVID-19 prices, our cash conversion cycle improved due to the quality of our receivable portfolio as a result of an increase in cash levels in 2020 -- cash sales, sorry, in 2020 and our active management of the collection cycle. This improvement also relies on the increase in accounts payable as we negotiated longer tenures with our suppliers. All the aforementioned actions and metrics were a result of our comprehensive and prudent financial strategy that allow us to have a solid liquidity position that has been recognized not only by local rating agencies, which maintained us in the highest rating possible in Peru, but also by all 3 global rating agencies, which have affirmed our investment-grade rating with a stable outlook. Finally, let me circle back to Alfredo to wrap up today's presentation with a glimpse of what we expect for 2021.

Thanks, Juan. Let's turn to Slide 31 to give you some guidelines about our expectations for 2021. Although there's still a high level of uncertainty for the year ahead, we wanted to share with you some key trends that we expect for 2021. In terms of impacts related to the pandemic, we still see COVID impacting some of our businesses and the markets where we operate. Our government is still trying to balance the reopening of economies to resume growth with restrictions to protect public health and avoid further spreading of virus. However, we remain optimistic as we have learned how to operate in this context during 2020 and are in much better position to tackle any further impact on our operations. Regarding commodity prices, as we mentioned before, in the recent months, there have been material increases in the prices of soft commodities versus 2020. And this trend of higher commodity and food prices will set the trend for 2021. This context finds us in a relatively good position with the sophisticated hedging expertise and leadership in the market. Nonetheless, it will demand a dynamic and agile pricing strategy to protect the profitability of our business, while, at the same time, protecting market share and volumes. While we continue to expect robust demand in the case of our Consumer Goods businesses, which are exceptionally well positioned to capture it, we still expect some uncertainty regarding the pace of recovery of the food service and the Aquafeed industries. In the food service industry, the positive outlook for restaurant GDP is expected into 2022. While in the Aquafeed industry, we expect to recover volume and market share in 2021 and expand margins in 2022, on the back of our farmer-centric strategy supported by digital solutions and improving market conditions. In this context, we are not -- although we're not able at this point to give you specific margin guidance for 2021 due to the reasons I previously mentioned, we do expect high single to low double-digit top line growth for 2021 and a CapEx of approximately $150 million. Finally, I would like to reaffirm my confidence in the capacity of our people, our competitive advantages and the resilience of our businesses and brands to continue to get us through these difficult times. Thank you for joining us today. And now we welcome any questions that you may have.

[Operator Instructions] And we will take our first question from Alonso Aramburú with BTG.

I have a question regarding the Aquafeed business. You mentioned some pricing action at the beginning of the year. Can you comment on that? And what's been the reaction from clients? And also, can you comment a little bit more? I don't know how relevant it is this agreement with La Fabril in Ecuador. I mean how much incremental volume do you think you can get into that market?

Alonso, thank you very much for the call. I will direct the first 1 to Hugo, who leads our Aquafeed business, and the second 1 to Jose Cabrera, who leads our Consumer Products business internationally. Hugo, please go ahead.

Okay, Alfredo. Thank you, Alonso, for the questions. In the case of aquaculture business, historically, the aquaculture business has been able to transfer the increase in raw materials cost to feed. As we have done in the last month of December, we believe that the prices of shrimp and salmons are sufficiently high which can transfer further increases. This is our strategy.

Yes. Go ahead, Jose.

Yes. For the Ecuador question. La Fabril is the leader in the edible oil market in Ecuador. They have significant coverage all over the country. We believe their coverage is about 15% higher than the coverage we had before we made this alliance with our own local distributors. And actually, the volume for Q4 was up 22% -- 21.8% to be exact in our Ecuador business. And I think that's beginning to show the full effect of the La Fabril alliance. So we would continue to expect double-digit increases in coverage and household penetration behind this alliance.

Okay. And related to that, are you competing directly with them? I mean, it seems a little bit unusual. If they can distribute your products, are you distributing different products?

Different products, different categories, noncompeting categories.

Okay. And regarding the first question on Aquafeed, can you give us a sense of the size of the pricing increase? And should that have -- I mean, how much of a positive impact should we expect maybe in the first quarter?

Hugo, please go ahead.

Yes. Our last price increase in Ecuador in December was 3%, in order to maintain the trend of the raw materials. We could have a positive impact in the next month.

Right. Now raw materials -- I mean, this is maybe a general question regarding raw materials. But the prices of commodities are probably higher than 3%. So maybe if Alfredo or somebody can make a comment about just the relative dynamics on gross margin potential compression given the higher commodity prices.

Thank you, Alonso. We mentioned during the call, I think this is a major trend that's happening or started happening late last year, and we foresee to continue the following year in basically all the soft commodities that we operate with. This price increases on the cost side will obviously put pressure on our side to translate those price increases into actual end product pricing strategies, which we are already deploying. We, as part of that, are also doing all the efforts possible to clear the fierce competition in terms of acquiring at better prices those commodities. On the specifics on the impacts for our consumer products, it grew mostly. And our B2B in Peru also -- let me just very quickly transfer that answer to Patricio first, who will talk on the Peruvian consumer product side, but also Luis Estrada, who will comment on our B2B side. Both have impact and both have strategies to cover those impacts. Please, Patricio, go ahead.