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

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Alicorp's Second Quarter 2026 Results Call on the 24th of July 2026. [Operator Instructions] The format of the call today will be a presentation by the management and IR team, followed by a question-and-answer session. So without further ado, I would like to pass the floor to Mr. Felipe Martins, Investor Relations Officer at Alicorp. Please go ahead, sir.

Good morning, everyone, and welcome to Alicorp's Second Quarter 2026 Earnings Call. Speaking to you is Filipe Martin, Managing Director of Financial Planning and Investor Relations Officer. We are pleased to have you with us today. Presenting today will be Mr. Gonzalo Arbelaez, Chief Executive Officer; and Mr. Luis Banchero Picasso, Vice President of Finance and Strategy. Other members of our management team will join us during the Q&A session. . Today, we will review the company's results for the second quarter of 2026, following the release of our financial statements and earnings report filed earlier today. If you haven't had the chance to access these documents, we invite you to visit our corporate website at www.alicorp.com.pe, where you can also find the presentation accompanying today's call. Please note that this conference is intended exclusively for investors and analysts. Therefore, we will not be taking questions from the meeting. If any members of the press are on the line and wish to follow up, we kindly ask that you contact our team after the call. Before we begin, I would like to remind everyone that some of the statements made today may be forward-looking. These statements are based on assumptions and factors that may change, and actual results could differ materially from current expectations. We encourage you to view the disclaimer included in the earnings report before making any investment decisions. Now I am pleased to turn the call over to Mr. Gonzalo Arbelaez, CEO of Alicorp to do the presentation. Gonzalo, please go ahead.

Thank you, Felipe, and welcome to the company. Good morning, and welcome to everyone to this call. We have important updates of our business to be shared during the call. Please let's move to Slide #5 to review some of the highlights I want to share with you. Despite a very dynamic environment in which we are operating, it was another strong quarter for our company, reflecting the consistent execution of our strategy. We delivered solid top line growth of 10.2% supported by a healthy 3.2% increase in organic sales, demonstrating resilient underlying demand across our entire portfolio. Beyond another quarter of solid financial performance, we continue to strengthen the strategic foundations of each one of our business units. In Consumer Goods, Peru, our largest business, we maintained or gained market share across 5 of our 7 iconic brands or prioritized brands, which delivered a 13.5% year-to-date revenue growth while advancing our innovation agenda through initiatives such as the relaunch of the entire Don Victoria Pasta brand, the expansion of our Alacena margines portfolio, a new Avena variant in our Angel brand, new formats, price pack architecture in casino among many others that contributed to our revenue growth. In B2B, our strategic priorities continue to gain traction, delivering a 13.7% year-to-date revenue growth while now representing 22% of the business gross profit. Vitapro sustained its momentum, driven by continued growth in our shrimp feed business further increasing its contribution to our portfolio mix. Finally, our recent acquisitions continue to demonstrate the strength of our inorganic growth strategy and agenda. With the seamless integration of our Jaboneria Wilson, now substantially complete Inka crops already contributing positively to both our consumer goods business in Peru and our international business platform. We will discuss each of these highlights in more detail as we review our operating performance later in the presentation. Additionally, I would like to highlight an important milestone in our liability management strategy. Last week, as many of you should know, we successfully placed 285 million in a 7-year bullet bonds maturing by 2033. The issuance was approximately 1.8x oversubscribed, enabling pricing at a fixed rate of 6.25%, representing a spread of 98 basis points over Peruvian government bonds. The transaction further optimized our debt maturity profile, enhance our financial flexibility and underscores the market confidence in Alicorp disciplined financial management, solid credit fundamentals and definitely the long-term growth strategy we have in place. Finally, and not less relevant, we are very proud to share the Alicorp has been included for the first time in the S&P, Dow Jones best-in-class Mila Pacific Alliance Index, recognizing companies with leading financial and ESG performance across the entire region. This complements our second consecutive inclusion in the Standard & Poor's sustainability yearbook. This reinforces Alicorp's ESG leadership, increasing visibility among the ESG-focused investors and strengthening our access to sustainability -- sustainable financing. Now with all these news, I will hand the call to Mr. Luis Banchero who will walk us through the operational results in detail of the quarter and share our outlook for 2026. Luis?

Thank you, Gonzalo. Let's move to Slide 7 to review the main drivers behind our revenue performance during the quarter. As mentioned earlier, we delivered solid top line growth during the quarter with revenue increasing 10.2% year-over-year to PEN 3,155 million. The primary driver of this performance was strong organic volume growth, complemented by a favorable sales mix, reflecting healthy demand across our portfolio and the consistent execution of our commercial and category strategies. These positive drivers were partially offset by lower pricing reflecting commercial actions implemented in response to competitive conditions in categories such as detergents and bakery flours. Additionally, depreciation of the Peruvian sol against the U.S. dollar yielded a partial offset through its translation effect on our U.S.-denominated businesses, U.S. dollar-dominated businesses, particularly Vitapro. Finally, the successful integration of Jaboneria Wilson and Inka crops meaningfully contributed 5 percentage points out of the 10.2% revenue growth as these businesses were not yet consolidated in the base period. Let's now look at how each business contributed to our overall revenue growth on Slide 8, please. Looking at revenue growth by business units, each of our businesses contributed positively to consolidated performance supported by different growth drivers. Consumer Goods Peru was the largest contributor during the quarter supported by strong volume growth in detergents and continued momentum in edible oils, where an improved sales mix also contributed positively. The second largest contributor was international business, which continued to reflect a positive impact from recent M&A transactions, and [indiscernible], as these were not included in the respective base periods. And finally, Vitapro also delivered a positive contribution supported by another quarter of solid volume growth as they continue to ramp up volume in its recent additional production capacity. Overall, these results highlight the strength and diversification of our business portfolio with multiple growth engines contributing to consolidated revenue performance. Please let's now move to Slide 9. The strength of our top line performance was also translated into solid profitability during the quarter. Adjusted EBITDA totaled 470 million, up 7.5% year-over-year. Consumer Goods Peru and our international business were the main contributors to this improvement, supported by strong volume and mix execution in Peru and the contribution from recent acquisitions internationally. Alicorp contributed to deliver resilient gross profit, although EBITDA results were impacted negatively by a challenging competitive environment in the flours and vegetable oils category and higher expenses. And Vitapro continued to deliver positive commercial performance, although profitability reflected a more challenging margin environment compared to the exceptionally strong levels recorded in the first half of 2025. Adjusted EBITDA margin stood at 14.9%, 0.4 percentage points below the same period last year, mainly reflecting the normalization of the margins in, partially offset by margin expansion in Consumer Goods Peru. Despite that, disciplined commercial execution and continued cost management across our businesses resulted in yet another quarter of solid profitability excluding the impact of inorganic growth, adjusted EBITDA would have increased 3.1 percentage points. Now please turn to Slide 11 to review the operational performance by business units, starting with Consumer Goods. Consumer Goods Peru delivered another strong quarter with sales volumes increasing 7.8% year-over-year and continuing to grow sequentially. Revenue increased 11.2%, driven by strong volume growth and a favorable. Volume growth was partially driven by detergents, which grew 16.6% during the quarter. Several other strategic categories also delivered solid volume growth supported by sustained momentum of our core brands across edible oils, cookies, sauces and cereals, reinforcing the quality of our commercial performance. Importantly, this momentum was reflected not only in stronger market position, but also in the successful execution of our innovation agenda throughout the year. We launched Don Vittorio, our emblematic brand, we relaunched Don Vittorio, our emblematic brand introduced new liquid detergent formats for the modern trade channel and expanded our Alacena Mionis portfolio with 4 new variants, further strengthening our value proposition across key categories. As a result, adjusted EBITDA totaled PEN 199 million during the quarter, up 13.4% year-on-year, with an adjusted EBITDA margin of 18.6%, up 0 percentage points. This performance was supported by a 0.3 percentage point expansion in adjusted gross margin, demonstrating the resilience of our business model and the effectiveness of disciplined commercial execution. Now please let's go to Slide 12 to review Alicorp. Our B2B business continued to deliver positive commercial performance during the quarter. Revenue reached 795 million, up 2% year-over-year, supported by a 1.4% increase in sales volumes. Despite the challenging competitive environment in flours and vegetable oil categories, our strategic priority to continue to deliver encouraging results. Revenue generated by these initiatives increased 13.7% year-to-date, reflecting our capability to create differentiated solutions and customer development programs to support transformation and improvement of our client businesses. These efforts continue to enhance our business mix with gross profit per ton approximately twice that of the overall business. During the quarter, this related into a 2 million increase in gross profit for our B2B business despite a more challenging cost environment. Adjusted EBITDA totaled 100 million during the quarter, down 6 million compared to the same period last year despite resilient underlying operating performance. This year-over-year decline was mainly driven by temporary losses this quarter associated with commodity risk management strategy compared to gains recorded in the second quarter of 2025. Now please turn to Slide 13. Our international business delivered another quarter of strong growth with sales volumes reaching 43,000 metric tons, up 23.7% year-over-year. Revenue reached USD 81 million, increasing 69.1% versus the same period last year. This performance was primarily driven by the contribution from our recent acquisitions with contributing approximately 14,000 and 2,000 metric tons, respectively, during the quarter. This strong performance reflects the successful execution of our acquisition strategy, expanding our regional footprint and making a meaningful contribution to our consolidated results. Ecuador was the main growth driver during the quarter, supported by Jaboneria Wilson. Sales volumes increased more than fourfold year-over-year, driving revenue to USD 22 million. With the integration now substantially complete, we are beginning to see the commercial impact through market share gains across our home care categories. Other geographies also delivered solid growth, driven by the contribution of both Incada and Haneda. In Bolivia, temporary road blockades during May and June affected sales volumes during the quarter. Nevertheless, revenue increased 25.1% year-over-year, reflecting disciplined commercial execution and proactive portfolio management despite a complex operating environment. The appreciation of the Bolivian against the U.S. dollar also provided additional support to reported revenue. Despite these temporary disruptions, we maintain healthy margins through disciplined commercial management while contributing to strengthen our leadership position in key categories such as detergents, shortenings and household spreads. Adjusted EBITDA totaled USD 14 million during the quarter, more than doubling compared to the same period last year. This improvement was driven by higher gross profit across both geographies, primarily reflecting the additional volumes contributed by our recent acquisition, together with a solid commercial performance in Bolivia where financial discipline supported a significant year-over-year improvement. Overall, our International business delivered another quarter of strong growth, demonstrating both the strength of our existing operations and our ability to successfully integrate and scale recent acquisitions. Now let's turn to Slide 14 to review performance of. In Ecuador, shrimp feed volumes increased 33% year-over-year, 33% year-over-year significantly outperforming the country shrimp export market, which grew only 15% over the same period. This performance reflects a strong underlying demand and disciplined commercial execution. Supported by this momentum, total sales volumes across all categories increased 18.5% year-over-year and 12.3% quarter-over-quarter sustaining the strong growth trajectory since the beginning of the year. As a result, revenue reached USD 295 million. Following an exceptionally strong first half margins began to normalize in the second half of last year and have been -- remained broadly stable throughout 2026. As a result, adjusted EBITDA margin decreased from 15.5% to 12.3% and adjusted EBITDA totaled $13 million in the quarter representing a 9.7% year-over-year decline. These EBITDA results reflect our successful reformulation efforts and use of alternative raw materials, which help us mitigate the impact of higher global commodity and input costs while preserving product performance and profitability. While the shrimp market in Ecuador continues to experience low prices and margin compressions, export volumes broke historic records in May and remained strong. In this environment, Vitapro is successfully maintaining both sales volumes and market shares while further enhancing product performance to continue to support profitable growth we recently launched 2 strategic product innovations, Jalis23 aimed at strengthening our distributor channel and our -- and an expansion on our early-stage feed portfolio further consolidating our leadership in the early-stage nutrition segment. Let's now turn to Slide 16, where we will review our leverage, debt and liquidity indicators. As a result of our consistent operating performance, we were able to offset the impact of M&A activity and dividend payments on our leverage throughout the year, resulting an increase of only 0.3x in our net debt to adjusted EBITDA ratio from 1.9% in December 2025 to 2.2x in June 2026. Excluding the effects of M&A activity and dividend payment, our leverage ratio would have been -- remained at 1.9x. In terms of liquidity, our available cash position stood at 871 million, 650 million lower than the same period last year. This reduction reflects our vision to optimize our cash balance levels and align with our liability management strategy. By extending the maturity profile of our debt, we have increased our financial flexibility, allowing us to operate with lower cash balance. As part of this strategy, and as mentioned earlier in the presentation, last week, we successfully placed a 285 million, 7-year bond. The proceeds will be used to refinance upcoming short-term debt maturities, increasing the average maturity of our debt from 3.3 to 3.6 years and further strengthening our debt maturity profile. Despite lower cash balance, our liquidity position remains strong. Our cash position still covers 0.8x our debt maturities over the next 12 months increasing to 1.2x when committed credit lines are included. Looking ahead, we will focus our efforts on keeping a smooth maturity profile and efficiently managing our working capital to support cash generation and as a result, preserve a healthy and flexible leverage profile. Before moving to our closing remarks, let me briefly revisit our outlook for 2026 on Slide 18. Based on the solid performance delivered during the first half of the year, results have evolved in line with our expectations, supported by consistent execution across our businesses and the contribution from our -- from both our organic operations and recent acquisitions. While we continue to operate in a dynamic environment, we remain confident in our ability to navigate changing market conditions, supported by the resilience of our diversified business model and the disciplined execution of multiple initiatives across the company. These initiatives include commercial actions and other mitigation measures that are expected to partially offset recent cost pressures while supporting sustainable value creation. Accordingly, we are updating our revenue guidance and now expect mid- to high single-digit growth for the full year. At the same time, we reaffirm our expectation of lower to mid-single-digit growth in adjusted EBITDA. We also reaffirm our expectation of approximately 2.0x net debt to adjusted EBITDA by the year-end. As previously communicated, should the acquisition opportunities currently under evaluation, but be successfully completed, leverage could temporarily increase to around 2.4x before gradually returning to our target range. Finally, we reaffirm our CapEx guidance of approximately USD 110 million for 2026. Investment plan remains aligned with the company's strategic priorities supporting both organic growth opportunities and the continued event of capabilities that will strengthen our long-term competitive position. With that, we will open the floor for any questions you may have.

[Operator Instructions] Our first question comes from Alonso Aramburu from BTG Pactual.

Yes. A couple of questions on my end. First, if you can comment on your B2B volume growth expectations, which have been in the low single digits. Just wondering if given a context of improving consumption to should support a little bit higher volume growth in the second half of the year? Second question on Bolivia. It's been very volatile on the margin front from fourth quarter. Just wondering if you can give us any sense of of where should EBITDA margins should be in Bolivia on a more recurring basis. And maybe finally, just on your guidance, your low to mid-single-digit EBITDA growth. You grew 6.5% in the first half of the year. It seems like you have more tailwinds and headwinds in the second half. Just wondering if it's been too conservative. Thank you, Alan. So I think we have Luca on the call. Luca, are you present to take the B2B part of the question.

Yes. Can you hear me? Can you hear me?

Yes.