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

Thank you and Good morning, everyone. We are very pleased that you could join us today. I am Gisele Remy, Managing Director of Finance and Productivity and IRO at Alicorp. As presenters today we will have Mr. Alfredo Perez, Chief Executive Officer; Mr. Manuel Romero, Chief Financial Officer; Mr. Patricio Jaramillo, Vice President of Consumer Goods and other members of the management team who will join us during the Q&A session. Today we will be discussing the fourth quarter 2021 results after the financial results and earnings report we issued on Tuesday. If you have not yet received a copy of the earnings report, please visit www.alicorp.com.pe where you will also find the webcast presentation to accompany our discussion during this call. 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. These forward-looking statements are based on 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 on 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, Gisele. And Good morning, everyone. And thanks again for joining us today for Alicorp's Fourth Quarter 2021 Earnings Call. Today's call we'll discuss the fourth quarter and the fiscal year 2021 results with a special focus on the yearly results since 2021 came to an end. I would like to start by giving you an overview of the most important external factors that impact our basic performance, followed by an update of some of our performance indicators for the year and our main strategic initiatives to then move on to our consolidated results. Patricio and Manuel will afterwards cover our financial results by business unit and at the end before the Q&A section I will take the floor again for an update on our guidance for 2022. Now, let's move on to Slide 5 to cover the most relevant external factors impacting our business performance. In 2021, inflationary pressures along the value chain have been one of the main challenges that global food companies faced. Agricultural commodities continue to experience significant price increases with soybean oil increasing 106% and wheat 80% over the past year and a half. Also oil prices recovered quickly and increased over 100% in the same time period, translating into higher cost of packaging, transportation and freight, among others. Consensus does not expect a turnaround of the commodity price cycle in the coming months, which means that we will continue facing margin pressures. An additional factor that contributed to margin pressure in 2021, especially in emerging regions was the depreciation of local currencies against the US dollar. On the sanitary front, despite Peru's third wave of positive COVID-19 cases, there has been no critical increase in COVID related deaths or hospitalizations. This is explained by the successful vaccination campaign carried out in Peru during 2021 where 48% of people over 20 years old is vaccinated with at least 2 doses, while 36% have already received a third booster dose. This has been crucial to reduce the transit and capacity restrictions and continue the economic reactivation of the country. Let's move on to Slide 6 to discuss economic conditions in the main regions where we operate. After a very difficult 2020, macroeconomic recovery was only partial in the Andean region in 2021. Even though GDP growth was supported by external factors like the positive price trend of export goods, unemployment rates and informality are still above pre-pandemic levels. This has affected disposable income, which in an inflationary environment has led to a contraction of certain consumer market and also an increase in the preference for more affordable goods. Now, let's move on to Slide 7 to review performance indicators for full year 2021. 2021 brought new challenges after a 2020 without precedent. Our company needed to adapt to constantly changing circumstances using the capability we have been building for years. We are proud of all the hard work our people which translated into resilient results for our company. Our revenue grew 24% versus pre-pandemic levels reflecting mainly inflationary pressures, we highlight that our EBITDA in 2021 outperform 2019 EBITDA by 3%. This would not have been possible without the efficiency efforts implemented during the year to counterbalance gross profit pressures with SG&A representing a smaller portion of sales. Regarding our people, in 2021, we were able to keep our company within the top 10% worldwide in the Organizational Health Index or OHI with 80% of our geographies ranking at least between the top 25%. Moving on to our strategic enablers, digital analytics and innovation. We are very happy with the progress made in 2021. On the digital front, we continue with our SAP S/4 migration with a successful go live of our biggest subsidiaries. In addition, we saw the consolidation of our 3 digital projects. The idea in the consumer goods in SUMA in our B2B business and Vitapro in aquaculture business. We will continue accelerating growth on these initiatives and remain confident that they will provide attractive returns in the medium and long term. Moving on to innovation. Given the current context, we have prioritized our lunches and relaunches to focus on the categories and platforms that can really move the needle for Alicorp in the short term. Thanks to our design to value initiatives, we expect that these investments will allow us to continue growing in our current geographies and recover profitability in certain key categories. On Slide number 8, we will discuss in more detail the implementation of the efficiency program announced last quarter. As we mentioned last quarter, the ongoing cost pressures we experienced due to several factors such as commodity price increases and increase of in distribution costs coupled with devaluation led us to escalate our efficiency efforts with the purpose of supporting profitability in line with strategic prioritization without impacting market positioning. We're currently on track with a multi annual efficiency program and objectives announced last quarter and expect to deliver at least PEN 200 million in run rate savings by 2023. Over PEN 100 million of SG&A reductions have already been executed. A small portion was already reflected in 2021 with some related restructuring expenses, and most of these savings will be reflected in our 2022 financials. Regarding COGS initiatives, we have implemented a set of design to value initiatives both on the reformulation as well as the packaging fronts without impacting quality and the preference of our consumers. Furthermore, SKU rationalization and lean manufacturing projects should support profitability in 2023 and 2022 included as well. Later this year, we'll also be reviewing our go-to-market model with the objective of reducing our cost to serve and also strengthen this key competitive advantage for Alicorp. Finally we would like to mention that given the successful go-live of the S/4HANA across Alicorp, we'll now focus on ensuring adequate adoption and reducing complexity in our processes to maximize value capture. Now let's move on to Slide 9 to cover the sale of our Brazilian and Argentine subsidiaries. Through the last quarter of 2021, we successfully completed the sale of our Brazilian and Argentine subsidiaries. Both transactions are aligned with strategic goal of focusing on our growth on the Andean region where we can best replicate our competitive advantages and reinforce our commitment to efficient capital allocation. In strict compliance with accounting standards, the financial results we will comment next have derecognized Brazilian and Argentinian net assets from the balance sheet. While the net result for both operations were separated in our P&L in the net result for discontinued operations line. Furthermore, the result for 2020 were also restated for comparability purposes. It is important to mention that a closure of the sale transactions generated non-recurring losses of PEN 394 million that impact our consolidated results of the year. We would like to highlight that these impacts are non-cash and that 45% of the loss comes from the reclassification of accumulated losses from foreign exchange translations, which had already been recognized in our equity, and is now passing through the income statement after the sale, therefore neutral to our balance sheet. Let's now discuss our consolidated results for the fourth quarter and full year 2021 on Slide number 11. Consolidated revenue grew up 38% while volume increased 16% year-over-year in the fourth quarter of 2021, mainly driven by the solid performance of our crushing, aquafeed and B2B businesses, and the price increases in our consumer good business given cost pressures. On a full year basis, revenue increased 31% year-over-year and volume 9% reflecting higher revenue for our business units and volume recovery in our B2B, aquafeed and crushing units. Moving on to profitability, let's now review our consolidated EBITDA for the fourth quarter and full year 2021 on Slide number 12. Consolidated EBITDA exhibits an important increase for the quarter compared to 2020 mainly explained by the strong performance of our crushing, b2b and aquafeed platforms. This was partially offset by the decrease in our consumer goods Peru and international units due to cost pressure and fueling down effects. Full year EBITDA increased 18% year-over-year boosted by the remarkable performance of our crushing and B2B units and the solid growth of our aquafeed business. Let's now review our consolidated net income for the fourth quarter and full year 2021 on Slide number 13. Net income fell PEN 386 million year-over-year, explained exclusively by the sale of our Brazilian and Argentinian operations through the last quarter of 2021 as previously mentioned. Excluding this effect, fourth quarter net profit increased 7% due to higher operating profit in addition to lower income tax. On a full year basis, net income fell PEN 359 million. Excluding the discontinued operations, full year net income increased 11% reaching PEN 403 million. Now let me pass the floor over to Patricio who will discuss the operating results of our CGP and CGI businesses.

Thank you, Alfredo. Let's begin with an update on Consumer Goods Peru dynamics on Slide 15. For the fourth quarter of 2021, Peru's GDP is expected to grow 3.2% year-over-year, while full year GDP growth is estimated around 13% reflecting a rebound effect from a 2020 COVID-19 recession boosted by positive external tailwinds. As mentioned previously during the call, the successful vaccination campaign, and at least until now, and apparently milder COVID-19 third wave have enabled the government to remove curfews completely, increasing mobility and a more back to normal environment. This has led to a normalization of at home consumption rates, reducing selling volumes for our business in line with market contractions while accelerating the recovery for the B2B business units. As a result during the second semester of 2021 and moving forward, we expect volumes more in line with pre-pandemic levels. Furthermore, uncertainty and higher inflation due to price increases in several key categories have reduced Peruvians purchasing power who are now looking for more affordable product alternatives when buying food, home and personal care items. Importantly, while markets such as pasta, edible oils, detergents, bleach and tuna continue to decline during the second half of the year versus a very high 2020. We see clear signs of volume recovery in those key categories. In our last November December reading, share results shows strong growth in edible oils and detergents versus prior period. Furthermore in the modern distribution channel, volume shares are steadily growing in 68% of our categories since October, mainly in laundry soaps, bleach and also edible oils. In addition, it is important to mention that we are experiencing a better product mix in most of our categories with core brands recovering volumes faster than expected. We remain positive that this promising outcomes will consolidate into even better share results in the near term. During 2022 we will continue to focus in recovering product mix and gradually recovering our gross profit per ton. Finally, our Marcas a tu lado program has benefited more than 85,000 bodegas from popular markets. According to a recent survey, clients are demanding 50% more of Alicorp's Marcas a tu lado products when compared to previous months. Also 61% of our clients claim that these products are preferred by final consumers versus competitors in the same price range. Sixty percent claim that the sales have grown and 56% considered that their client base has increased because of the program. Thanks to this program, we were able to recover volumes in key categories during the third and fourth quarters. Despite this success in terms of volume, the growth of these brands has led to a temporary deterioration in product mix and gross profit per ton that while recovering our scale have affected results during the second semester of 2021. Let's move on to the financial performance of our Consumer Goods Peru unit on Slide 16. Fourth quarter revenue grew 2.5% compared to the third quarter of 2021 and decreased 1.3% versus last year. During the quarter, we had positive results in our panettone and detergent categories, growing 7% and 5% in sales, respectively, when compared to last year. For the full year, consumer goods grew, revenue increased 5%, supported by pricing in key categories to partially offset raw material and exchange rate impacts. For the full year, sales growth in edible oils, surface cleaners and panettones contributed to our overall gain. However, despite several pricing actions taken, gross margins decreased 6.3 percentage points versus last year. EBITDA for the quarter decreased significantly. As mentioned earlier, on the gross profit side, despite pricing actions and revenue management initiatives, we were unable to pass through all of the impacts of commodity price increases, devaluation, mix deterioration and increasing transportation costs. Additionally, in the case of our SG&A, this quarter also reflects a portion of the nonrecurring restructuring expenses as a result of our efficiencies program commented earlier. Let's move on to Slide 17, Consumer Goods International market dynamics. Regarding our Consumer Goods International unit, we were also experiencing similar high raw material costs and high logistic costs that have affected our results during 2021. In Bolivia, price controls in edible oils were limiting our ability to recover margins even as we have virtually eliminated Tier 2 and Tier 3 price differences into a single selling price. Additionally, the significant gap between the official and parallel exchange rates in Argentina has increased product smuggling to Bolivian civil categories, affecting local sales. Regarding homecare, per capita consumption continues to be above pre-pandemic levels, which have resulted in higher sales in detergents, cleaners and bleaches category, mainly through our Sapolio brand. Importantly, market shares in Bolivia have grown in all categories versus 2020, with edible oils reaching 55% of shares in value, detergents 20.2% and margarines 37.5%. In Ecuador, higher vaccination rates and a recovery in economy have resulted in lower at-home consumption of key food categories. Nevertheless, tiering down has accelerated in pastas, detergents and sauces, impacting not only our brands, but also our B2B business. Despite this impact, shares have also increased versus 2020 across all categories, with pastas reaching 17.4% and mayonnaise at 14%. On Slide #18, we will cover our Bolivian operation through a consolidated view of our consumer goods and crushing units in the region. We consider it best to analyze our Bolivian operation on a consolidated basis since our Bolivian consumer goods operation is critically integrated to our crushing unit. We believe that this integration allows us to compete in the domestic oil market more effectively and achieve profitability in high commodity pricing cycles as the one we are experiencing today. Another factor to take into consideration when interpreting Bolivian results is the impact of the mix of internal and external consumption of our crushing businesses, coupled with the commodity pricing cycle. Crushing serves as a natural hedge for the performance not only in our consumer goods unit in Bolivia, but also of our consumer goods businesses across geographies. Considering that approximately 20% of volumes sold is for internal consumption by both our Consumer Goods Bolivia and Aquafeed businesses, and the remaining volume is sold to third parties. Consequently, even when looking at the consolidated business, it is important to note that in phases of peak commodity prices, such as 2021, the gain displayed by our crushing business is much larger than the loss in our Consumer Goods Bolivia operation, which lost PEN 59 million of EBITDA in 2021 compared to last year, while crushing posted PEN 269 million higher EBITDA. In 2021, our Consumer Goods Bolivia operations showed a stable sales volume explained by a drop in domestic oil volume impacted by smuggling, partially compensated by robust growth in detergent categories with continued market share gains explained earlier. Revenue increased 4%, explained by pricing actions, were not enough to offset incremental costs and translated into an EBITDA drop, which was partially mitigated by prioritization efforts in marketing and administrative expenses. Moving on to the performance of our crushing unit, it posted a notable year, mainly explained by the positive effect of price increases in international commodity prices and higher production of soybeans in Bolivia in which Alicorp had a record share of 38%. Volumes sold to third parties grew 19%, reaching export records aligned to the largest soybean campaign we had. Revenue increased 66% year-on-year in U.S. dollars, explained by higher prices and soybean imports to the [ poultry ] sector of Peru, reaching 26% of market share. As you know, the results we reported in our financial statements come from the sale to third parties. However, we would like to highlight that crush volume in 2021 reached 1.3 million metric tons, growing 16% year-over-year. This is an outstanding result, product of a great harvest in which Alicorp had record shares, a powerful approach to producers with a differentiated value proposition and outstanding team performance. Looking at Bolivia through the cycle EBITDA since our acquisition, we remain confident that Alicorp will continue generating value in this country and that the acquisition has achieved attractive results for our shareholders. We will continue analyzing opportunities to accelerate organic growth, leveraging on our very strong goal to market strategy. Let's move on to the performance of Consumer Goods Ecuador, on Slide 19. Ecuador's revenue grew 7% year-over-year in the fourth quarter, fueled by positive market share gains in all categories, as mentioned previously. However, EBITDA is close to breakeven due to a lower gross profit as a consequence of cost pressures and tuning down and higher SG&A expenses partially related to restructuring efforts also explained earlier. Now let me pass the floor over to Manuel, who will discuss the operating results of the rest of our businesses.

Thank you, Patricio. Let's move to Slide 20 to review an update on the market dynamics for our B2B business unit. The restaurant industry continues to recover, operating at close to pre-pandemic levels as restrictions are loosened and consumers resume out-of-home activities. Our foodservice platform outperformed Peruvian restaurants GDP and exceeds 2019 revenues. This has been achieved, thanks to our brand equity, our strong relationship to existing customers and our successful new client prospection. By year-end, we reached 20,000 active clients with 4,000 of these being new clients. We are very happy to share with you that despite some impact in the first quarter of 2021 due to COVID, sales volume in 2021 was in line with 2019 volumes and gross profit reached 99% of the 2019 level, reflecting a robust recovery after the material impact COVID had on our business. In this ongoing path of recovery, customers are looking for more value products, accelerating tiering down in most of our categories, such as edible oils, lard and flour. Despite this, we have maintained adequate profitability levels in most of our tiers, minimizing impacts in gross profit per ton when compared to 2019. Our ability to serve our clients' needs with our multi-tier strategy, strong brands and service level has allowed us to maintain our clients' preference. We have also begun the complexity and prioritization efforts to ensure that we maintain healthy levels of profitability across all our platforms and clients. Let's move on to Slide 21 to review the financial performance of our B2B business unit. Thanks to the initiatives we discussed in the previous slide, revenue grew more than 50% in the fourth quarter compared to last year due to market recovery, clients' prospection and price actions aimed at compensating for higher commodity prices. Our foodservice and bakery platforms posted 48% and 45% year-over-year growth, respectively, on the back of a pricing strategy that balances market competitiveness and profitability. The fourth quarter gross margin gained 0.3% despite a significant additional cost pressure during 2021. Moreover, gross profit per ton increased 47% year-over-year and EBITDA increased 3.3x against the fourth quarter of 2020. On a full year basis, gross profit per ton grew 29% and EBITDA increased 2.6x versus last year, showing very positive results and exceeding our expectations. Next, we will cover the Aquafeed market dynamics on Slide 22. In Ecuadorian shrimp exports, there were still significant volumes exported to the U.S. and Europe during the last quarter, consolidating a more balanced and diverse Ecuadorian shrimp go-to-market strategy compared to previous years. We estimate that shrimp production in Ecuador has increased by an impressive 36% in the same comparison period, reaching the landmark of more than 1 million metric tons in shrimp production. These numbers have surpassed all initial estimations for Ecuadorian shrimp and demonstrate the potential and importance of this market for the world. International trade for shrimp is recovering rapidly despite logistics disruptions. The positive demand scenario in addition to COVID-19 related capacity disruption in other shrimp producing countries and global supply chain problems led to a significant increase in shrimp prices, which surpassed pre-pandemic levels at year-end. Thanks to these positive market dynamics, Ecuadorian shrimp farmers are optimistic about future results and are confident that we will be able to increase on shrimp densities, which also increases the demand for feed. We will continue investing even more in automation and new technologies, which include Vitapro's new digital ecosystem. The market will continuously have tiering up towards more premium diets where Vitapro is the market leader, and they will continue to reopening dry ponds and improving industrial facilities in order to better cope with growing demand from the U.S. and Europe. With these factors, we are confident that Ecuador will continue having very attractive growth levels and Vitapro will achieve very good numbers for the coming year. Regarding the salmon feed business, exports of salmon from Chile increased by 2% in the third quarter of 2021 compared to the previous quarter and are expected to continue their recovery towards year-end. As with shrimp, the recovery of demand for salmon, especially from the U.S., but also from other import regions is above pre-pandemic levels and continuing its upward trend due to a combination of higher out-of-home consumption, which translates into a recovery of the global food service industry and increased retail sales. Due to this initial demand recovery and estimated lower export volumes from Chile in 2021, prices in the salmon market have bounced back to above pre-pandemic levels. This increase in prices have incentivized farmers to rapidly start stocking, and we expect higher export volumes for 2022. To compete successfully, Vitapro is continuing to deploy its differential go-to-market strategy in order to capture new client feed volume tenders in 2022. We are also on track to capture efficiencies in our cost structure and SG&A to increase competitiveness in this market. In general, 2021 has been a great year for Vitapro as we were well positioned to capture market value and volumes as soon as the market conditions improve and demand for feed started to ramp up. Let's move on to Slide 23 to review our financial performance for our Aquafeed business unit. In terms of business performance, Vitapro posted a remarkable 55% revenue growth, mainly explained by an increase in volume in both of our business units and by price initiatives introduced to compensate the increase in our raw material prices. Gross profit gained 30% year-over-year due to higher volumes, while gross margin lost 2.7%, mainly explained by price increases in our raw materials. EBITDA increased 46% year-over-year, also due to volume in addition to SG&A efficiencies. Let's move to Slide 25 to discuss liquidity and our strong balance sheet. Regarding our debt metrics, as of the fourth quarter of 2021, our net debt-to-EBITDA ratio, excluding financing for raw materials inventory on our crushing business, reached 2.93x. This is a slight improvement from 2.99x as of the third quarter of 2021. During the fourth quarter, we received a profit from the sale of our Brazilian subsidiary. However, this was partially offset by a temporary increase in our working capital needs, mainly in our crushing, aquafeed and B2B business units. Let's move on to Slide 26, please. Regarding our liquidity levels, as of December 2021, we reduced about PEN 369 million of debt to get us closer to an optimal cash position level. As a result, as of December 2021, we had PEN 905 million in cash. This reduction was the product of the repayment of short-term liabilities and the partial amortization of long-term debts. The prepayment of these financial liabilities will allow us to reduce our financial expenses over the next months and increased flexibility regarding our financial obligations. Although we reduced available cash as of December, our liquidity covers 2.4x the principal of debt maturing over the next 12 months. Moreover, and to further boost our liquidity, we have committed credit lines in the amount of PEN 180 million ready to be disbursed. Regarding our working capital over the last 12 months, as of December 2021, our cash conversion cycle averaged 17 days despite increases in inventories caused by supply chain difficulties in several of our businesses. We expect an improvement in cash generation for 2022 as a result of our continuous efficiency programs aimed to improve profitability and to optimize working capital needs. This will ensure a reduction in our leverage ratios through 2022. All of these actions show our comprehensive and prudent financial strategy, which has been recognized not only by local rating agencies, which maintain us in the highest possible rating in Peru, but also by all 3 global rating agencies, which maintained our investment-grade ratings with stable outlook. Finally, let me circle back to Alfredo to wrap up today's presentation with a view of what we expect for 2022.

Thank you, Manuel. Let's turn to Slide 28 to wrap up today's presentation with a glimpse of what we expect for our full year results. First, I'd like to share with you our main assumptions behind our guidance. In 2022, we expect the continuation of gradual economic recovery in our main geographies, which should translate into better conditions for consumer goods unit. We also foresee positive tailwinds to Aquafeed through the solid growth of Ecuadorian shrimp export volumes and crushing business continuing to benefit from high commodity prices; however, with lower EBITDA generation versus 2021. In terms of raw material costs, we do not foresee a correction in the peak of the commodity cycle we are currently experiencing. The main risk for guidance are therefore the volatility of commodity prices and also of local currencies as well as political uncertainty, especially in Peru. Taking the aforementioned factors into consideration, we expect revenue to reach double-digit growth for the full year. EBITDA growth reached high single digits as we will not yet see full margin recovery given the peak in the commodities cycle. In that sense, we will be focused on gross profit and EBITDA per ton levels. Our main focus for 2022 will be achieving gradual recoveries in our Consumer Goods Peru hoping to exit 2022 with gross margin per ton in line with previous years. As for our investments for the year, CapEx should reflect our prioritization efforts falling to $70 million, excluding our aquafeed business. This represents almost 30% reduction versus 2021 levels, excluding aquafeed. In the case of our aquafeed business, we initiated a very relevant capacity expansion in 2022 with an increase of 240,000 metric tons in production capacity. This project will represent an investment of approximately $87 million in 2 years with approximately $43 million being disbursed in 2022, in addition to $12 million in recurring CapEx. This will take our [ consolidated ] CapEx plans to approximately $125 million, very similar to 2021 levels, but with a much higher percentage being allocated to our aquafeed business. For leverage, our net debt-to-EBITDA ratio should fall to approximately 2.7x by year-end 2022, excluding raw materials in our crushing business on the back of solid free cash flow generation. This concludes our presentation, and we now welcome any questions that you may have.

Thank you very much for the presentation. We will now be entering the Q&A part of the call. [Operator Instructions] Our first question comes from Mr. Alonso Aramburu from BTG Pactual.

I wanted to get a little bit more color on the guidance. You mentioned double-digit revenue growth in 2022. Can you comment maybe on some of the drivers, some of the segments? What do you expect in Consumer Goods Peru, Bolivia, Ecuador? And given the crushing business, I think it's going to have a tough comp. So where do you see this double-digit growth coming from?

Thanks, Alonso. Let me just very quickly pass along the question to Patricio to further expand on our expectations for our Consumer Goods business, including Peru, Bolivia, et cetera. Patricio, go ahead.

Thank you, Alfredo, and thank you, Alonso, for the question. Yes, we do, as we've mentioned earlier in the call, we do expect the business, especially in Peru to recover. We had a low single-digit revenue growth this year when compared to -- in 2021 when compared to 2020. And we expect that number to reach double-digit growth by the end of 2022. And this is mainly because of 2 factors. One is obviously the volume recovery that we have been experiencing over the last, I would say, quarter. I remember in the last call when we had a significant volume decrease given our pricing strategies to partially offset cost impacts and that reduced our overall volumes more than 20% on a per month basis. We are seeing those volumes recover. So we should have probably a better second half of the year when compared to 2021, and that will enable us to reach that double-digit growth in revenues. And in terms of EBITDA, as Alfredo mentioned before, while recovering our EBITDA per ton or gross margin per ton that we had in previous years, through pricing carryovers that we had last year and some additional pricing strategies that we're going to be implementing in 2022. Well, those EBITDA numbers will also recover significantly versus 2021.

So overall, on a consolidated basis, so the main driver for double-digit revenue growth with the Consumer Goods Peru. I mean is that a consolidated guidance, just to check? Or is it -- that's the guidance for Consumer Goods Peru?

No Alonso, the guidance that I just presented is a consolidated basis. It obviously includes what Patricio has mentioned on the consumer goods front in all the different geographies that we have, but also includes our both aquafeed business, crushing business and our B2B business in Peru as well.

Our next voice question comes from Ms. Maria Fernanda Mori from Compass Group. It looks like the line has dropped indeed. We will just give a second for the caller to reconnect. In the meantime, we have a text question coming from Mr. [ Hector Pascal ] from [ O&P ]. Is it possible you can let us know why you have forecasted a CapEx of $70 million on aquafeed? Have the credit ratings improved with devaluation to 2019?

Okay. Thank you for the question. And as we mentioned, our CapEx program, excluding our aquafeed business includes our efforts to be very conscious of our capital expenditures given the conflicts that we are facing. On aquafeed, as we also have mentioned, it is a business, especially our Ecuadorian shrimp feed business is growing significantly, and we have already reached capacity levels, while the market is still expected to grow significantly for the years to come. So that is why we are putting forward this additional CapEx program on a 2-year phase, which includes $40-plus million for this year. So that is the reason. Now on the credit rating standpoint, let me just defer the question to Manuel, who will very quickly answer it for you.

So in the credit rating side, we are pretty much in line with 2019 levels. So far we are not expecting any changes on that side.

We will now try to once again reconnect with Ms. Maria Mori from Compass Group.

What are the trends that can affect the EBITDA in 2022 that you see in Peru, Ecuador and Bolivia?

Okay. Thank you for the question. Obviously, our expectations on the EBITDA front is, will be growing on the high single-digit side and we expect an important recovery on our consumer goods businesses, but also solid performances of our B2B businesses, including aquafeed, including crushing business as well. Crushing, very quickly there, we expect not as good as a performance as we had last year, but still a very good performance given that the business still is expected to benefit from the peak cycle of the commodities, in this case, the soybean oil and soybean meal. The other businesses, we expect a recovery in consumer, as Patricio mentioned before, of our EBITDA figures, given that we'll see consumption patterns come back to more pre-pandemic levels in the sense of hopefully getting higher value-added products into our portfolio as was done before in our B2B businesses, also a little bit more of the same. The pressures though that we'll still face are significant on the -- especially on the cost side. And given that we expect, as we mentioned before repeatedly, that the commodities will continue to stay at very high levels. So therefore we need as company to keep pushing in all the different efficiency programs that we have already decided to implement because that is the only way to protect our margins from the pressures that we face. As we also said, and this will be something that we'll be talking to you guys more often is we'll not only be looking at percentage margins, but also to per ton margins both at a gross profit and EBITDA levels. That will give you a better sense, especially on the commodity-related businesses as how we are recovering profitability through different initiatives, pricing, efficiencies, up tiering in the different categories that we compete, et cetera. So that is a little bit of the explanation as to why we expect that single-digit EBITDA growth for next year -- for this year, I'm sorry.

Our next question comes from Mr. Felipe Ucros from Scotiabank.

I wanted to focus a little bit on the down trading that you guys have been seeing on Consumer Goods Peru and on B2B. It seems that the response to your actions has been fairly different than the 2 divisions, right? When I look at Consumer Goods Peru, obviously, the down trading has caused some significant shift of the market shares from core to values, as you guys showed us on Page 15. But it seems that in B2B, the down trading really hasn't affected your profitability. So I just -- I was just hoping you could kind of walk us through a little bit of what's causing that difference between the 2 divisions, right, down trading affecting profitability, a lot of Consumer Good Peru, but not on B2B? So -- and I know the clients are different, obviously, but just hoping you can talk to us a little bit about the difference between those 2.

Thank you, Felipe. Let me very quickly pass the floor to Luis Estrada to comment on the impact that this down trading has had on the B2B side. And then obviously, then Patricio can comment a little bit more on the consumer side as well. Luis?

Thank you, Alfredo, and thank you, Felipe, for the question. Yes, effectively, actually, we have been able to be more successful in transferring the increase of costs on to -- for prices, Felipe. But I would say that most of the success is achieved, thanks to a couple of elements. One, the constant segmentation that we're doing from our customer base and making sure we're choosing the right segments and the right customers and being very close to them. And the second one, I think, has to do with how we are approaching these customers. One of the things that we have learned and we continue to learn is that the portion of the value proposition that we have that is allocated to services. So to give you an example, one of the customers that we're visiting actually right now are very concerned as to how to manage their budgeting and cost structure. Other customers are expressing concerns on how to do the right mix on the different raw materials that we sell to them. And our technical services team is helping them optimize how they manage their business. Those actions we believe are helping us to have the ability to transfer the cost and have the ability to continue to have a premiumness over our competition. The second -- the third element that we have worked on during the last, I would say, 4 months of the year of 2021, it's what we're calling the complexity and it has to do with understanding deeply by using our ABC tool, the quality of the gross margin and making some hard decisions like we have let go some categories that are not -- were not necessarily contributing and adding value and focusing on those that are adding value to the business. So I would say it's a mix of things and elements and the fact that we're dealing directly with customers, I think, helps the business to be able to transfer the increase of costs into the crisis. I will let Patricio comment on the B2C front.

Thank you, Luis Estrada, and thank you, Felipe, for the question. I would just complement on Luis Estrada's comments saying that in Consumer Goods Peru, different to our B2B business, we compete in more than 30 different categories. And with a substantial, I would say, different type of pricing alternatives and competition in several key categories, which are volume driven, such as edible oils, pastas, cookies and crackers, flour. We even compete with local players who do not see margin structure similar to what we see in terms of percentage and see it more on a per ton base, which is what Alfredo explained earlier. So I would say that the dynamics are kind of like different. The offerings are different. Also what we're seeing in terms of Consumer Goods Peru is that, as we have mentioned before in earlier calls is even though the traditional trade is slowly gaining ground and recovering some pre-pandemic levels, the growth of the modern trade has been significant over the past 2 years. And within the modern trade, private label has become, I would say, a more aggressive competitor in pricing in several key categories that also have affected our product and category mixes. The good thing about that, Felipe, is that over the past couple of months, we've seen a better-than-expected recovery in terms of our core value splits. So whereas when we were discussing third quarter results, we said that we were kind of like seeing a shift into more of a 60% volume on value versus 40% volume on core. That is slowly returning to the original 60-40 inverted cycle that we had on 60 core, 40 value. So we are very confident that that will continue to be the case as we are also deploying some pricing strategies to shorten the gap between those 2 offerings to consumers. But it has been a rocky road. And I would say that we are improving. We are very confident that we can achieve. We are seeing already the results. As we mentioned before, the first focus of our efforts during last quarter was to regain our scale, which we did with the Marcas a tu lado program. The results were very impressive. And now we're slowly recovering profitability, also increasing our marketing expenditure on core brands and core categories during this first half of the year.

Very clear, Patricio. And maybe if I can follow-up on your side of the business, Patricio. We're seeing something very different in Peru from what we're seeing across our food companies in the rest of the region, right? I mean we've seen devaluations, logistics problems, commodities going up throughout the entire region, but Peru has been very different. And the only different thing that I can see really is the political angle. Do you think that's most of what's causing the consumer to behave so different from the rest of Latin America and Peru? Or is there something else that we're missing?

I would say that there are a little bit more differences here in Peru than we're seeing in the rest of Latin American countries. As you know, Peru has exhibited the highest COVID mortality rate in the world. We have had the most restricted lockdowns also when compared to other countries in Latin America. And definitely, I would say that the political uncertainty that we're currently experiencing has somewhat constrained many of our clients of expanding their businesses and also unemployment rates are still high. There's a lot of not formal employment, which is driving on people on getting the most cheaper alternatives when buying foods and services. When we take into account prices that we have increased last year on edible oils, it's around 60%, 70% when compared to 100% that the raw material itself has increased, and we don't see those level of increases in salaries within the country. So I would say that the political uncertainty does certainly have an impact on it. But as things continue to evolve, we remain confident that, that perhaps will improve. But what we do see an improvement is in our efforts on gaining share, recovering shares, mainly in the modern trade as we have seen before and talked about that and recovering our mix. So despite what happens, I would say, on the political front, we remain confident that we're going to be continuing to recover the business in the short term.

And maybe, Alfredo, I'd like to do a follow-up on Bolivia. Given you're having price controls affecting some of the lower tier categories and oils. Do you have to make a decision between delivering more soy internally for oil production versus exporting more soybean oil and maybe making more money in that business? I mean is there -- do you have to sort of make a decision of do I sacrifice the little of my consumer business to take advantage of the crushing business a little more in this environment? Or how do you choose between those 2 given the price controls?

Well, as you correctly point out, in our Bolivian operation, specifically in the edible oil side, we do have our price controls that have been in place for a while now. And we deal with them the best way possible. In terms of how we maximize value, I think through our consumer platform will be always our preferred point of contact. However, I don't think we have had to choose. We always push forward to maximize volumes through our consumer products platform despite the fact that we have that close price controls. On top of that, we obviously push for our export business on the crushing side. So no, we don't have to really actually make that decision. I think the markets behave in that respect, with the price controls, very naturally. The one element, there's always an issue that was mentioned before by Patricio is that in Bolivia, we also have that in Peru as well, but not as too much of a threat is all the black market that gets -- in oil is coming from Argentina into the Bolivian economy. That obviously, it puts pressure on our [indiscernible] operation. But again, as part of how we manage our business.

We do have another text question from [ Alberto Chan ] from BCP. The question reads, as you mentioned, Marcas a tu lado program was one of the keys to the 2021 results. The question is about 2022. Is this program going to continue to be as important as it was in 2021?

Thank you for the question. I'll very quickly defer for Patricio to answer it. Go ahead, Patricio.

Thank you, Alberto, for the question. Yes, definitely, Marcas a tu lado was a significant program to recover our scale and also to start to recover our shares during the back half of 2021. We are dialing a little bit down on the intensity of the program because we are obviously in our efforts to recover profitability, and that is going to be driven by some pricing carryovers and additional increases to try to recover that gross margin per ton that we mentioned earlier. And also because we want to recover our product category mix. And by that, we're going to be increasing our marketing expenditure in our core brands, in our core categories such as detergents, sauces, in edible oils, we're going to be increasing our marketing expenditure in our top-tier brand, Primor. We're also going to be increasing our marketing expenditure in Don Vittorio, which is our top premium price leading pasta. So we are going to be dialing up, I would say, on those core brand marketing and promotional activities and hoping to recover mix by those increased activity. So Marcas a tu lado has been important. We're going to keep perhaps expanding the program more on client to client, I would say, initiative on better, on how to improve our traditional trade businesses, expanding perhaps on that end, more on the advertising front of the brands that were included in the program, at least for the first trimester of the year.

Thank you very much for the comprehensive answer. I'm seeing no further questions at this point. I'll pass the line back to the management and IR team for the concluding remarks.

Thank you, again. Let me just once again thank everybody for participating on our call. In case if you have any additional questions or make any comments, please don't hesitate to contact us directly. And obviously stay safe and have a great day. Bye-bye.

Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Have a great day. Goodbye.