Grupo Bimbo, S.A.B. de C.V. (BIMBOA) Earnings Call Transcript & Summary

Good day, and welcome to the Grupo Bimbo Results Fourth Quarter and Full Year 2022 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Daniel Servitje, Chairman and CEO. Please go ahead, sir.

Thank you, very much and good afternoon, everyone. Thank you for joining us. Connected on the line today is our CFO, Diego Gaxiola, our new COO, Rafael Pamias; BBU's President, Fred Penny; Mark Bendix, Executive Vice President; Lou Minella, BBU's Senior Vice President and several members of our finance team. 2022 was a remarkable year with historic financial performance, reaching $19.8 billion in net sales and $2.7 billion in EBITDA and posting 10% and 12%, 10-year compounded annual growth rates, respectively. We saw market share gains in most categories, made record CapEx investments of $1.4 billion, fine-tuned our strategic focus on grain-based foods after selling Ricolino, invested in and grew our brands successfully turned around Argentina and Brazil and we launched our sustainability strategy. I am very proud of the dedication and hard work of our associates who have worked tirelessly during the headwinds of this challenging global environment. The demand for products during the year was historic. Our volumes grew across all regions despite price increases to offset inflation with continued market share gains and the snacks, buns and rolls and tortillas categories outperformed. We continued to experience a challenging environment in Canada, and China. The latter starting to show positive signs after the drastic COVID restrictions were lifted recently. We continued to make progress on our ESG initiatives, reaching milestones, such as ending the year with 85% renewable electricity globally and 20 countries are now operating with 100% green energy. I believe we are the most advanced food company in the world in terms of renewable electricity consumption. We were also included for the first time in the Bloomberg 2023 Gender Equality Index and we were recognized by the Carbon Disclosure Project for our actions globally to mitigate the effects of climate change making it to the very selective A list. And you saw in our press release, we are making also important changes to our senior leadership team. We have named Rafael Pamias, our Chief Operating Officer. Rafael will be leading our 4 global regions and will continue to be our Chief Sustainability Officer as well. Throughout his 6 years of Grupo Bimbo, Rafael has had great success with ever-increasing responsibilities, leading high-impact projects such as the turnaround of food challenging operations, Brazil and Argentina. And he also led, as we mentioned, the launch of our sustainability strategy. Fred Penny, who you know will be retiring at the end of March. I would like him to say a few words. Please Fred, go ahead.

Thank you, Daniel. You know it's hard to believe that it's been 11 years now that I've been President of BBU. It's been a real privilege to have this opportunity in an industry that I have spent my entire career and 42 years now. It's certainly not what I envisioned coming out of graduate school that I would do, but it's been terrific. I'm grateful for what this industry and Grupo Bimbo have meant to me and to my family. I can't go without saying that we've accomplished a lot since the Sara Lee Baking Company acquisition in late 2011 and I took over right after that. With the commitment and passion of our leaders and associates, both current and former, we built an industry-leading national baking company through integration, transformation, and the growth focus. I'm confident that with the current BBU leadership in place and grounded in our core beliefs of safety, diversity, equity, and belonging, and respect for the person that will be successful growing and continuing to transform the baking industry. Lastly, I want to thank the analysts, past and present, for your interest in and your support of Grupo Bimbo. Over 44 calls now, which is an amazing number to me, I've enjoyed our interactions as well as our occasional challenges and I expect we'll get some of those today. So with that, Daniel, thank you and I'll turn it back to you.

Thank you very much, Fred and well, I really want to thank you for your many enormous contributions to the Grupo Bimbo family and for your friendship. And following Fred's retirement, Tony Gavin will be taking on this role and he will report to Mark Bendix, who has joined us on this call today. Mark will add BBU to its existing responsibilities of Bimbo QSR and Bimbo Canada. Tony, Mark, and Rafa would take on these challenges, I'm sure, with passion and their leadership will help us become a more sustainable, highly productive, and deeply humane company. Looking into 2023 and beyond, we will implement step change initiatives to leverage the next wave of growth in sales and EBITDA expansion. Through initiatives such as superior quality, always accelerating our brand goals, continuing strategic CapEx investments, even greater presence in our household penetration, and other points of sale, revenue growth management and digital transformation among others. Now, looking into the results by region for the quarter. North America delivered very strong topline performance, growing nearly 22% in dollar terms, mainly due to the implementation of price increases. We are happy to see continued momentum in our share performance as we grow it across almost all categories. Net sales performance was also benefited by an extra week of sales when compared to the prior year. Despite the challenging operating environment, the margin only contracted a slight 10 basis points. This reflects an outstanding effort from our teams which were able to successfully navigate unprecedented inflation and a critical labor and operating environment and yet delivered better than expected results. Inflation pressures were partially offset by a favorable portfolio mix and strong investments in our brands. We will continue to innovate, invest in our brands, and remain confident, but the breadth of our portfolio position us favorably to navigate through the many macroeconomic uncertainties. Our focus remains to offset inflationary pressures through productivity, pricing, and revenue growth management strategies, while working hard to win share in our branded categories. I'm happy to share that BBU was recognized by IRI as the fourth fastest growing CPG company in 2022 and the fastest growing food company in that universe. This is the second time BBU has earned this recognition since 2020. In Mexico, sales improved by over 17%, attributable to favorable price product mix and price increases. Every channel posted double-digit growth and most notably, the convenience, retail, and traditional, as did the snacks with baked goods, snack cakes, cookies, and bread categories. Adjusted EBITDA margin contracted 370 basis points, reflecting a one-time write-off related to a prepayment to our supplier. The high inflation environment including raw materials and the effect of higher volume and lower margin intercompany sales between Mexico and US also affected that margin, which was partially offset by the strong sales performance and efficiencies in distribution and administrative expenses. Moving on to EAA. Excluding the FX effect, sales increased more than 24%. This was mainly due to the implementation of price increases as well as volume growth across most countries in the region coupled with the acquisition of St. Pierre. The adjusted EBITDA margin contraction of 60 basis points resulted from FX headwinds, high inflation, and the negative product mix effect in Iberia, arising from an increase in private label as well as weak results in China. In January, we completed the acquisition of Vel Pitar, the leader in the baking industry in Romania. Vel Pitar has a diversified portfolio within the bread category and distributes its product through 10 plants in the country. This acquisition, which was closed at 8 times the enterprise value to EBITDA, reinforces our global strategy by expanding our presence now to 34 countries, allowing us to continue strengthening our presence in the EAA region and adding new brands with superior quality to our portfolio. Finally, moving on to Latin America, excluding the FX effect, net sales increased over 33% as a result of double-digit growth in almost every country, most notably Brazil, Argentina, Colombia, and Chile. We reached a record EBITDA margin in fourth quarter and for the full year. This was attributable to several factors, including the operational leverage from incremental sales, the productivity benefits across the value chain, and the strong results in Brazil and Argentina from the successful implementation of turnaround initiatives. We also inaugurated a new plant in the southern end of Chile, as we continue to see a strong demand in that country. I would now like to turn over the call to Diego who will walk you through our financials. Please Diego, go ahead.

Thank you, Daniel. Good afternoon everyone and thank you for joining us today. I would like to start with a summary of our financial results for the full year, which were outstanding, especially when we consider the challenging comparison from the record levels achieved in 2021; a highly inflationary environment, a complex operating environment in some markets, and the negative effects from FX rate. Net sales reach nearly MXN 400 billion for the first time in the history of our company and our adjusted EBITDA reached MXN 53 billion, which was mainly due to the strong sales performance, efficiencies in distribution and administrative expenses. Our adjusted EBITDA margin contracted as expected by 60 basis points, mainly due to higher commodity prices, a high overall inflationary environment in all our operations, and challenging labor market in some countries. A $734 million mix non-cash benefit we saw during the quarter is due to the reversal of a provision for the expected liability that is no longer needed because of special financial assistance that will be received by critical and declining MEPPs according to the American Rescue Plan Act of 2021 in the US. It is important to know that this is a one-time non-cash benefit. Our full year financing costs increased by over 33% because of a higher exchange loss and higher interest expense. Our effective tax rate stood at 31.3%, which reflects the mix of countries with a lower effective tax rate, as well as the benefit from our turnaround businesses that have been performing substantially better than previous years. These factors yielded an important improvement in net majority income of nearly 200% and have significant margin expansion of 710 basis points, reaching 11.8%. Our return on equity without considering the profit of the sale of Ricolino and the MEPPs effect closed at 15.1%. Turning to the balance sheet. Thanks to our strong operating results, we closed the year with a record level of net debt to adjusted EBITDA ratio of 1.5 times and our total debt closed at MXN 84 billion. The decrease was primarily due to the prepayment of debt using the proceeds from Ricolino as well as the FX rate effect. Our net operating working capital, which mainly considers accounts receivables, inventories and suppliers, has continued to improve significantly by nearly 3 days over the fourth quarter of 2021, which is the equivalent of close to MXN 3.2 billion, mostly due to the improvements in accounts payable. Lastly, I would like to mention that we are very pleased to have exceeded the guidance provided over a year ago, which by the way, we increased 2 times in a row because results were outstanding, given the high demand we experienced and continue to see across our operations. Now, I would like to provide some visibility on what we are expecting for 2023. In terms of revenues, we expect to see a growth of mid to high single-digit. Even considering the tough comparison of 2022, we are still expecting adjusted EBITDA to grow at a high single-digit rate, which will translate into a slight margin expansion. More specifically, we are expecting an impact on our results from inflation during the first half of the year, which will gradually lessen and we will see tailwinds during the second half of the year. These coupled with the operating leverage coming from the sales growth and productivity benefits from past investments in CapEx and OpEx, as well as a positive effect coming from the FX rate will result in the slight margin expansion. We expect effective tax rate to be between low to mid-30s, which is slightly higher to the rate as compared to 2022. Lastly, we expect our CapEx investments to be in the range of $1.7 billion to $2 billion. This higher CapEx is partly due to the carryover effect of 2022 and also because of the opportunities we are seeing to increase our capacity, given the demand of our products in the marketplace. We can now proceed with a Q&A session.

[Operator Instructions] The first question comes from Ben Theurer with Barclays.

[Technical Difficulty]

We lost Ben's line. Next question comes from Luis Willard with GBM.

So I'd like to speak about first, when you think about -- thinking beyond 2023, how do you think about your current price structure in the marketplace? Is it fair to assume that retailers, especially in the US have started growing a bit more reluctant to sustaining these price levels beyond 2023, as we start to see some commodity prices coming down? That will be the first and then I have a follow-up.

Well, if I may first on the global team lease, I think we've been finding that there is consumer resiliency and our volumes have been all-in-all being strong, and we're having high levels of costs of commodities and it will remain so for a period, but we don't have necessarily the vision for an understanding what's happening after 2023 or from 2023, I think that what we're sensing is that the market is responding well in multiple regions and we're very close to really address the issues that they're facing.

So, perhaps, I mean, the ideal way to put this question is you've been increasing prices to follow-up commodities pressures. So, in a more normalized environment, do you see retailers pushing you a bit more to be more promotional to entice consumption? I don't know if commodity start relaxing, that would be perhaps a better way to put that question.

We don't have that visibility as to what will happen. I would say the next year or the end of this year. At this point, what we're sensing is that we're mostly covered in many of our categories and countries and we hope that that will allow us to have some stability, at least in the near-term.

The next question comes from Alan Alanis with Santander.

My question has to do with US, what kind of elasticity are you seeing right now? I mean, specifically, are you seeing any kind of down trading already or volumes continued to be pretty robust in line with what we've seen in terms of economic environment? And then if you start seeing some down trading, how do you prepare? How do you anticipate that? And what kind of innovation and what's the role of innovation in order to deliver on this guidance?

I'd say this, I think -- and this shouldn't be a surprise in the fourth quarter as multiple food categories of experience, we did start to see some softening in tonnage from the impact of pricing and inflation, which has been significant as you all know. The good news from our standpoint is we've held or grown share in almost every category that we're in, even if the category has softened a bit. And Daniel mentioned this, we're going to see more significant inflation, at least for the first half of next year, 2023. And so, we have to navigate that. And there are 2 things that we'll do. One will be some, I'm going to call it surgical promotional activity, if needed. And 2 and more importantly, is more investment in our brands, from a marketing standpoint, and innovation. And I'm not going to get into the details of the products, but we are definitely pushing innovation as well as a way to buffer the impacts of pricing and inflation to the category overall.

And I think just anecdotally, I've noticed also increasing the coverage of your product throughout the United States. So, congratulations on that as well. Some of the results are also working because of the increased availability on the product. If I may, a last question maybe for you, Daniel. Daniel, could you remind us how you think strategically about salty snacks? I mean, Bimbo has been extremely successful, both in baked goods and salty snacks? I mean, how do you think about salty snacks currently, and strategically in the future? And that's the question more globally. I know you're having a lot of success in Mexico and in the United States, but remind us your strategic thinking behind salty snacks, please?

Yes. Well, what we did last year as you recall was basically focus ourselves on becoming more relevant, green-based foods company. And that includes all the categories in Beijing, as well as the categories of salted snacks that we're in. And salted snack, it is and it is going to be a part of our company's portfolio and we're investing whenever and however we find opportunities for growth in that category, as well as in all the sweet baked goods, cookies and sweet categories, sweet snack categories in the bakery. So it's another one of our categories, and we try to take good care of that one, as well as all the others.

The next question comes from Sergio Matsumoto with Citigroup.

My question is on the CapEx with the step-up to the record amount. Would you say those investments are intended for topline growth acceleration or for cost efficiency? Help us understand the effects and the timeframe, please?

As you can see, we have been increasing our CapEx plan every year. During 2021, we did for the first time in the history of the company more than $1 billion. And then 2022, although we believe we're going to be slightly below the plan, we ended with $1.4 billion. And as you heard on the guidance, we're expecting a higher number for 2023. Now, the reason for the increase, I would say its several points. The most important is the increase in our capacity. So this is 100% related to topline growth is not only in a specific geography, it's according to market and different categories in which we continue to see opportunities, and we continue to see the need to invest and to increase our capacity, that's in one country. On the other, we have also been a little bit more aggressive on investing on some profitability projects, that will not help the topline, but will help us to be more efficient and have an expansion on our margins. And lastly, also important to have in your mind is the inflation that we have seen in CapEx in the last 3 years, not always normally on commodities and food, also, we have been seen some pressure on inflation on the CapEx side. Being the less important of the 3, we have an important amount for 2023 of carryover projects that we already started last year, and also many other projects in the pipeline that we will start to invest in 2023. And of course, we will have some carryover effect for 2024.

Understood. And if I could add maybe my last question to Fred, could you comment on the private label's position in the US today? Has it changed in the last 3 years? Like, has it kind of lost its role or do you think it still plays a role in the industry volume perspective?

First, let me say that it clearly has a very important role in the category as it does in multiple food categories. I would say, however, that with the significant inflation that we've seen in the market and we've all experienced, and at least in the last quarter, we've begun to see a more, call it a more positive trend in private label, where it was trending negative for the last couple of years. It's either now trending less negative or maybe slightly positive. But it's an important part of the category and it's important part, frankly, of our portfolio as a supplier, but I wouldn't characterize it as some radical change in private label over the last few years. That's definitely not the case.

The next question comes from Lucas Ferreira with JPMorgan.

My first one is on your guidance. You're saying that in the second half, you expected to have several more cost tailwinds, your margin is probably better in the second half. Just wanted to understand how much visibility you have on this already considering your hedges. So if you can give us some more details on how much you hedge for the second half of the year? And how comfortable you are with this visibility into the second half? And I know you don't give much breakdown by region, but if this guidance considers some sort of a normalization in the profitability, especially outside the U.S. And the second question is a follow-up on the previous questions on the CapEx guidance. If you can give us a sense of what's the most sort of normalized CapEx from here. So what's the maintenance CapEx we should include in the model and what sort of a recurring expansion CapEx you've been doing? And if some more details you can provide on terms of which are the regions receiving most of this cash, that would be helpful?

Let me give you a little bit more color on why we believe that in the second half we will start to see some tailwind regarding inflation. It's not necessarily because we're fully hedged already, although we have already taken from some hedge or we have already some visibility. But the thing is that in the second half and particularly in the fourth quarter of last year, we had the biggest pressure in commodities. Remember that we have a lag, where you have to take into account that although commodities during the fourth quarter came down, we're seeing the effect of the cost of commodities early around 6 months before, say around half of 2022 where still commodities were at record levels. That is the pressure that we really would not want to have. So we have an easy comparison for the second half. Now still in the in the first quarter, we had many hedges that were taken before the commodity start to ease. In the second quarter, probably more in the third quarter, we will start to see these slight benefits that will help us learn and this is important for you to have it in your model. Know that on a quarterly basis, don't be surprised to see some continuous pressure on our cost of sales during the first 2 quarters of the year. In terms of the normalized CapEx, it's little bit hard to come up with a specific model, we will probably answer more directionally telling you that on one hand, our CapEx used to be before the inflation before COVID, maintenance CapEx between $400 million to $500 million, we have increased our capacity, and we're seeing inflation. So just from these 2 things, I would probably say that our maintenance CapEx is going to be more in the range of $600 million to $700 million. We have always been investing and reinvesting in the company, investing in growth, investing in productivity initiatives, I don't think it's going to be essential in the long run after 2024, 2025. In 10 years, we will continue to invest in the company. And it's hard to know right now, we do not have visibility to say okay, we will continue to invest these additional billion dollars on growth and productivity as we plan to grow in 2023.

Next question comes from Alvaro Garcia with BTG.

A couple of questions, the first one MEPPs, for Diego. This is obviously a different type of adjustment relative to what we've seen over the last couple of years. And I wonder, if this implies that there's some sort of change with what might run through your P&L that does eliminating this liability or this provision impact, what expenses you might have to your P&L?

Yes. We will continue to have some volatility because of MEPPs related to the interest rate because we still have some liability. It's a little bit more than $100 million. So it's a fraction of what we had in the past. If you remember before we increase on rate, we were close to $1 billion and also any movement or rate was very high and created a very high volatility for our results. We will continue to have the mark-to-market from interest rates is not one of the materials, it is going to be a fraction of compared to the past.

I guess the question was on contribution. So, the contributions to the plans themselves whether this changes the contribution…

Nothing changes the contributions. Basically, what we're having is that the potential obligation of having to form the MEPPs now with the resources that will be received is relatively very, very low. So, we do not need to have the liability on our balance sheet. And I mean, Lou is here with us, Senior VP for BBU, if you want to compliment anything, you please feel free.

Diego, thanks. You said it perfectly. Our responsibility to make contributions continues. You actually said it extremely well. This is just a provision, because we had the possibility or actually the probability of significant fund that we belong to going insolvent. And this was a provision to protect ourselves against the liability that would flow from that insolvency that has now been solved. And that's why the provision has been reversed, but our regular contribution obligations continue.

My second question is for Daniel, on the new organizational structure. I might be wrong, but I feel like it's the first time you have a Global COO. So I guess sort of asking strategically, sort of the new roles for Rafa, and Mark. Are these new roles and sort of what's the rationale behind that?

Yes, Alvaro. Because this is significant changes, as you mentioned and is related to the size and the complexity of our group, of our company. And what we're doing is trying to arrange ourselves in a structure that allow us to manage the growth that we have had, and that hopefully, we'll continue to have in the future. So that's the reason for these changes.

The next question comes from Felipe Ucros with Scotiabank.

So I'll go to my first one on supply chain constraints. We've seen a lot of commentary, specifically in the US from a lot of companies are discussing that most of the supply chain constraints have declined enough that actually logistics prices are starting to decline, freight for example is one that I've seen -- mentioned quite often throughout transcripts. So I'm just wondering what you're seeing there and if you expect any benefits from that in the US division and also wanted to ask about working capital. You've delivered a very impressive set of improvement on working capital last week by 3 days before that you reported 4 days and we've had similar improvements on a quarter-to-quarter for several quarters. So just wondering, how long you think you can deliver those improvements or do you think you basically at a point where working capital will be stable in terms of number of days? Any commentary that you can give us on that in terms of how we should be thinking about that in our models.

Felipe, I will take the first one. Yes, the freight rates have started to fall in some lanes, and obviously, if we can take advantage of change in price, we're doing it. But as you know, most of our business is done locally and I mean, we didn't have as much impact on that regard comparing to other CPG. So yes, it's one of the changes from the past. And on the other side, I think we're having other significant increases, particularly, for example, in the past year and recently, we have a high surging cost on x and that's something that goes against the P&L. Just to put one example, on the other side.

Regarding the working capital position, I would say, I mean, yes, we have been continuously improving the working capital of the company on the different accounts. I will say that we are close to the optimal working capital position, although I don't believe we're completely done with the program. There are still some opportunities not as big as they move as we have been in the past importantly, we'll go down to a negative number. What I'm sure that we will continue to have a very control working capital, a lot of options and especially see some marginal improvement for the future.

Great. And maybe if I can do a follow-up, Diego on price carryover for next year. Do you expect to already have your prices in place in one of the questions. I think I heard Daniel say that you fully covered for the next year and I'm sure that I've heard you, you're talking about hedges but then it became clear that your products are not as far advanced on hedging. So does that fairly set on prices, and you have enough carryover for what we see coming on next year?

Felipe, sorry. The line was not very clear. Can you repeat the question please?

Yes. Sorry about that. My question was about price carryover. In one of the comments you mentioned that you were fairly set working for next year. I thought you were talking about hedges. But I think your rather comment make me think that you're probably not talking about hedges, but you're probably talking about pricing? Are you all set with pricing for next year?

If I was able to get your question correctly, I would yes. We do think to have an effect of the carryover from price increases of 2022 in some regions a little bit more than others, like for example, in the US, the last round of price increases happened in the fall. So, as we continue to see the coming months, it will have this benefit on the price increase, in some other markets the increases took place before that so it's probably going to be 6 months. So if you were talking about the carryover effect of price increases, yes it is included in the guidance, it is part of our expectation on topline growth for 2023.

That was what I was looking for 6 months to 9-month carryover sounds like.

The next question comes from Antonio Hernandez with Barclays.

My question is regarding volume performance. Can you give a little bit more details on volume performance in North America and Mexico. And also, what are your expectations for this year?

Alfred, why don't you take the one in the US and I'll share my views on Mexico.

Sure, Daniel. Thanks, Antonio. I think I mentioned it earlier. Our volume performance for the most part for 2022 was very good, positive generally, we did see softening in the fourth quarter. As I mentioned earlier related to the categories starting to contract from the significant amount of pricing and inflation that I think consumers are feeling. I think our expectation is that we're going to grow our business in 2023 behind marketing investments, innovation, et cetera. But we are cycling in Q1, in particular, we're going to be cycling some significant volumes from year ago when there was Omicron, COVID spike. So, we'll have to see how the year plays out. But I think the important point I would leave you with is that our share performance is solid across most categories either flat or up and we'll have to see where the -- at the end of the day, I think part of this is where the category goes. But I would say we're optimistic about our ability to regain momentum to grow volume.

Yes. Antonio, on the Mexican side, I would say that we had all-in-all a very good year. In the fourth quarter, we experienced some softness in some categories, but I would say that we're starting the year on a good note. And we believe that this was more a temporary end of the year situation in some categories, but all-in-all very good and some channels during 2022 was very good even at the last quarter.

The next question comes from Lucas Ferreira with JPMorgan.

So I wanted to ask you about your net leverage and where do you feel comfortable with it? You had a significant decrease expected with Ricolino asset sale. So wanted to understand from you, where do you see that by the end of next year? And where do you feel comfortable getting?

We do not provide a specific guidance on growth. We think we're going to land by the end of the year in terms of the leverage ratio for Grupo Bimbo. What I can tell you on -- we'll start to do the math with the guidance including the CapEx plus some M&A activity. We already did the transaction of Vel Pitar in Romania. So I'm sure it's going to be a year in which we're going to be demanding some cash flow and this will put some increase in the leverage of the company. Now philosophically speaking, where we feel comfortable is between 2 times to 2.5 times net debt to EBITDA. Remember that the ratio, the way we measure it is without the IFRS 16. So it's a little bit more asset than taking just the EBITDA with the effect of IFRS 16. It's not necessarily that because will be long, we're comfortable basically, we see the financials of the company and we're very well positioned to be able to execute our organic and inorganic plans and capture the opportunities that we have in protocols.

The next question comes from Federico Galassi with BRC.

One question or 2 questions if I may. The first one is in the guidance in particular for the weight of US in the breakdowns in revenues and EBITDA. So how are you thinking of -- how do you take the FX, the Mexican peso or US dollar for the building the budget.

Of course, we do not have a crystal ball and we do not necessarily know where it is. We do have an assumption. It's more in the mid-19 making 19.5 around that for the average of the year. And with that exchange rate is how we convert the operations outside of Mexico in order to arrive at the consolidated level of Grupo Bimbo be able to provide you guidance and also to have a budget.

And the second question more related with the capital allocation. I understand that you can call the perpetual bond this year. Do you think in that, it's in the table?

Yes. The hybrid bond has its first call in April '23. I mean we will use its treatment as equity. As you remember, this financial instrument was issued 5 years ago in 2018. When the company was in a completely different financial position, so it made a lot of sense at that time to have these kinds of instrument as part of our debt structure. Today, we are analyzing different alternatives and the options. What I can tell you in advance is that we will exercise the option to call it and really look to have a more suitable instrument according to the financial position of the company that we have today.

This concludes our question-and-answer session. I would like to turn the conference back over to Daniel Servitje for any closing remarks. Daniel, is your line muted?

Yes. Sorry. Thank you all for your time today. And please do not hesitate to contact us with any further comments or questions you might have.

The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.