Grupo Nutresa S. A. (NUTRESA) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for your time waiting. [Operator Instructions] Your conference will begin shortly. I give the floor to Catherine Chacón to start the conference.

Thank you, [indiscernible]. Good morning, everyone. Welcome to the conference results for the third quarter of 2020 for Grupo Nutresa. At the table, we have Carlos Ignacio Gallego, President of Grupo Nutresa; José Domingo Penagos, Vice President of Corporate Finance; and Santiago Escobar, Director of Corporate Finance. My name is Catherine Chacón. I'm the Director of Investor Relations. After the presentation of the results, we'll start the Q&A session. The questions, you can ask them through the audio line or through the webcast chat line. If you ask questions, please state your name and the institution you represent. If you want to follow the slides in Spanish because by default or in English, you can download them from the screen, the platform. [ Operator Instructions ] Starting the presentation, I'll give the floor to Carlos Ignacio Gallego, President of Grupo Nutresa.

Good morning. Thank you for being with us, with the conference of the results for Grupo Nutresa for the end of the third quarter 2020. To start with, I'd like you to go to Slide #2. Where we share the interesting events for this period. We'll start with these interesting events by sharing 2 recent recognitions. For the 6 year in a row, MERCO Empresas, corporate reputation monitor, recognized Grupo Nutresa as the second company in Colombia with the best reputation and the first in the food sector. I'd like to point out that in year marked by uncertainty only 8 companies of the 100 companies that are the part of monitor MERCO, including Grupo Nutresa, maintained the same position they had in 2019. This shows the dynamics of the reputations -- the organization's reputation. Since we implemented this monitor MERCO Empresas present in 2018, Grupo Nutresa has helped with one of the 5 top places. And since 2014, we started -- we hold the second position. We believe that reputation is a consequence of what we do and of our relations with all stakeholders. I must tell you that in the lower part of the slide, that Servicios Nutresa, a company by -- from Grupo Nutresa wasrecognized as a gold with the seal of quality of Equipares. This is a program for certification of gender equality programs that invite companies to work on cultural transformation and to close gender gaps in the workplace. This recognition is the highest possible -- and the certification ratifies our commitment to strengthening our inclusive culture that appreciates diversity in every way and allows integrated development of men and women inside the organization. After these 2 recognitions, let's go to the Slide #3, where we show some -- a summary of our strategy for 2020, 2030. As you can see, our strategy is aimed at doubling by 2030 how our sales for 2020 with returns higher than the cost of capital used. To achieve this goal, we are offering our consumers foods and experiences with well-known and appreciated brands that nourish and well-being in pleasure and are differentiated because of the best ratio price relationship available in our strategic region. This will be managed by talented, innovative, productive, committed and responsible people. And within the framework of -- sustainable framework development. In the next slide, number 4, we show in the lower part on the left, our higher purpose, which is to build a better world where development benefits everyone. This illustrates our decision, our vocation of managing relationships with all stakeholders. And in the right, you can see a graph that shows all our objectives. I'll go to expand a bit, so that you can get a general idea of our goals. Our objectives for 2030 start with the growing generation advantage for all our related products, as you can see in the center, in white and are based on 3 pillars. First is inspiring development, growth and innovation. You can see that on the outside in orange. The second one is cooperating with people, our partners in society, which is in the lower right-hand side in blue. And the third one is preserving our planet, which is on the left lower part in green. Each dimension, we'll be working on some capabilities, which will enable us to achieve the goals that we have set for ourselves and that I will now summarize. Let me explain first inspiring the development, growth and innovation, as I said, which is in the top in orange. We're speaking here of managing categories, brands and models and experience. As you can see there in the slides of the pie that are concentrically located around the increasing value generation. This is the first one in this area, we have the evolution of the go-to-market model by geography, and we will consolidate our brand and network management based on a challenging growth and efficient with adequate value proposition for our client buyers and consumers. Also, we will continue to strengthen our leading brands by developing and expanding our portfolios. And we also include in this dimension, the development of geographies, where we hope to have 100% compliance with the geography and development plan. We'll keep a priority focus on our strategic region because we will accelerate -- enter into new areas of growth. We will also leverage the presence of Nutresa Group in areas such as Asia and Africa and other emerging markets through pilots, with cooperations with -- which will allow us to know better these markets. Thirdly, we're still in that orange dimension with competitiveness, where we are trying to have a ROI higher than the cost of capital. This is vitally important. And it consists of several items and initiatives that we will continue to implement in our organization, including evolution of our growth as a rate of demand, evolution of new technologies. We focused on efficiency and productivity, global suppliers and the gold master plan for logistics in Grupo Nutresa, the implementation of our operational excellence model, a continuation of our disciplined CapEx investment and the application of working capital, cash flows and fixed assets. And we're focused on capabilities, access to geography in consolidating businesses and categories with an emphasis on health and nutrition and also with the acceleration of enterprising activities. And lastly, in this dimension, we have the digital transformation, where we hope to at least get 20% of revenue through digital channels to the consumers and clients. We will improve our technologies to leverage our reach to market and will increase our master program to implement our technologies inside the organization. This completes the upper part of the dimension in orange, which is inspiring development and growth and innovation. Let's now go to the second front, which is in blue, and it's called cooperating with people, our partners and society. As part of this dimension, we have innovation and research -- effective innovation and research, where we hope to have 20% at least of our revenue come from innovation, and 50% of our innovations refer to health and nutrition. And with this objective we will continue to innovate in opportunities with a significant impact on revenue, profitability, sustainability, social and environmental. And we will have some differentiated innovations, which will allow us to develop innovations, which help our health and nutrition of our consumers, and we will have alliances in that -- with that purpose. And we'll have our -- this entry will be the source of support and research for our opportunities. Along the same dimension, we have talent development. We hope to have organizational climate and commitments, which are higher and superior, above 80%. And I hope to have low time in injury rates less than 1 with our cooperators and contractors. This is the way to measure our wasted time to lesions produced by some disability or incapacity. Total integration of our talent, we will continue to apply processes that will allow us to attract and to prioritize competent and committed employees, and we will strengthen our practices to promote self-care practices, productivity and sustainability. Always within the framework of inclusion and diversity. We will also look for at least 1,000 projects to develop capabilities in the communities. Development of capabilities in productivity and capability in vulnerable populations is part of our share value proposition. We will develop health projects, safety and -- food safety, and we'll increase our self leadership in self-management abilities based on our educational institutions. That completes the blue part, which is cooperating with people, partners and society. And we will complete the presentation of the plan by talking about the -- preserving the planet, which is in green. Here, we will work on looking for responsible suppliers, having 100% of our raw materials will be achieved productively and sustainably and also maintaining biodiversity. This is a challenging objective, which pushes us to improve capabilities and our suppliers to have a conscious and socially and environmentally responsible supply lines to develop an effective alliances to implement agricultural practices and involving innovating technologies, which will encourage competitive and inclusive businesses. And secondly, we will be working on caring for the environment using circular solutions, trying 100% of our packaging will be recyclable, reusable or compostable. This also involves a major commitment to research, innovation and implementing new technologies and packaging, which allow us to improve the use and recyclability. And for that, we will strengthen -- our alliances are the producers of packaging will implement codesign initiatives, and we will support projects for using packages in new production cycles. We're also trying to reduce by 40% our 1 and 2 scope emissions per ton produced. This is directly related to our ability to operate more efficiently and effectively, and this includes our logistics and distribution networks. All these indicators that we just saw in these 3 dimensions are deployed in each of our companies, and there is some levels that will allow us to maintain their implementation and which will allow us to ensure their progress. Complying with these new -- or achieving these new objectives is guided by organizational philosophy, which includes 10 principles that guide our corporate ideals, which is -- you can see if you go to Slide #5. These 10 principles are autonomy with strategic coherence, good corporate governance, corporate citizenship, productivity and competitiveness, effective innovation, development of our talent, integrity, reliable food and healthy lifestyle, collaborative management and respect. It's very important. I will not explain them one by one, but I'd like to tell you that after representing this plan that, as you can see, is challenging, has to do with society and with stakeholders and balanced on economic, social and environmental aspirations. We feel that we are sure that we have a major challenge to benefit all stakeholders, especially for all our shareholders. Let's go now to Slide #6. So that Alejandro -- like right now we have -- after this introduction, we can see how sales for the third quarter behaved. Here, I'd like to start by telling you that during this third quarter of 2020, we maintained high positive behavior both in Colombian sales and our sales outside Colombia, with the product -- high portfolios concentrated on home consumption products, such as biscuits, cold cuts, chocolates and pasta. They maintain a positive outlook. But those were our consumer foods or those have portfolios in these areas such as coffee and ice cream are still have been affected. We should note that in Colombia, we had during the quarter, 2 months with restrictions related to the pandemic. And in September, where we gradually began to flexibilize our restrictions on mobility. As far as sales in Colombia, we have -- sales were COP 1.701,8 billion with a growth of 8.4%. And we point out the pasta, cold cuts and biscuits as the best performers. When we exclude consumer business, we have a growth of 12.5%. The volumes went up 2.2% and the average price was increased by 10.1%, mostly due because of changes in the product mix with lower industrial sales and more accessible presentations, which make -- we lead that variation. We didn't have a 10.1% increase in prices. That is mainly the effect of the change in the mix. Organic growth was 5.5%. By business unit, we put a double-digit growth of the businesses in pasta and cold cuts. In the biscuits, while we exclude industrial sales and byproducts, we have a growth of 3.8%, which comes from 0.7% positive from the change in volumes and 3.1% of changes in prices. The cold cuts grew 14.4%, as a result of good business dynamics, especially derived from the trust by consumers on the brands and the convenience of the product portfolio. The chocolate business has a growth of 7.9% in revenue as a result of the recovery of volumes in the input categories and the good dynamics of table chocolates in the essential groceries area. Coffee decreased at 12.1% (sic) [ 2.1% ] because of lower consumption in cafeterias and offices, I mentioned that in the introduction. And retail foods, we had a decrease of 33% compared to the same quarter last year. However, vis-à-vis, the second quarter, this year, it grew 46.5% due to the strategies we've had and a great flexibility in people's mobility after September. We have a very good dynamics that I would like to point out and an ongoing recovery. In ice cream, we had a decrease of 3.7% compared to 2019, mostly due to the lower consumption outside of home and in ice cream parlors and because of less tourism. However, like in the previous business, compared to the second quarter, we grew 20% with a positive recovery. Finally, in pasta, we have a growth of 16.2% with very good dynamics in all channels. In this category, which stands out because of convenience, the consumer has been referred more accessible and higher-value brands. As far as sales out of Colombia, we reported revenue for $308.6 million with a growth of 4.7%. In Colombian pesos, that's represents COP 1.151,7 billion with a growth of 17%. The valuation of the period is 11.8%, vis-a-vis, the same quarter last year. The behavior in organic sales, excluding the acquisition of Cameron's Coffee by the 6.6% in euros and 11.6% in Colombian pesos. Considering the devaluations of the currencies in several of our countries where we're at. When we exclude retail food, the growth in dollars will be 6.9%. By business, biscuits has a good business dynamics in the Central American platform and lower volumes in the U.S. and Puerto Rico. Tresmontes Lucchetti has a growth of 12.8% in its functional currency. When we included devaluation of 10.7% of The Chilean peso vis-à-vis the dollar, revenue grew 2.7% in dollars. In coffee, we had an organic growth of 4.4%, which by including the sales Cameron's Coffee has increased to 37.5% compared to the same period in previous year, very significant this behavior for coffee. In chocolate, we had a decrease of 8.9% as a result of lower volumes. In our Peru and Mexico platform is where we have portfolio, which are more focused on impulse products. In International retail foods, we have a similar effect on what I already mentioned in the Colombian operations, restriction for quarantine and physical displacement restrictions. We point out that discovery, very positive also by growing by 36.1% compared to the second quarter of this year. In the cold cuts, we reported revenue for 0.6% increase with a very good business dynamics and the growth in Panama. Let's go now to Slide Number 7. When we combine the growth in Colombia of 8.4% and the international of 17%. We reported a growth of 11.7% during the quarter, very good. With sales -- consolidated sales of COP 2.853,5 billion. The organic growth is equally significant 7.7%. If we were to exclude retail foods, the growth would be 15.2%. In the midst of a very challenging environment, we point out of the very positive results in business activities reflected in the revenues that we are reporting. In Slide #8, I will refer to accumulated sales by the end of September 2020. In these accumulated sales, we have, as you know, the combined effect of 2 months with normal business dynamics, which were January and February and 7 months with the effects of the COVID-19 pandemic. As far as Colombian sales, we reported sales for COP 4.859,5 billion, with a growth of 8.4%. And we point out pasta and cold cuts and biscuits as the best performers. Organic sales, excluding the acquisition of Atlantic Food Service, is COP 4.722,5 billion, growing 5.4%. By excluding the sales of retail food in the period, the growth would be 12.3%. We had increases in all our business units, except retail foods and ice cream, which are affected, as I mentioned, especially by the social distancing measures. We have a balanced growth in the accumulated volume and prices and the changes -- respond to the change in the mix of products and portfolio. As far as International sales outside of Colombia, revenues for the period are $894.6 million, with an increase of 6.7% in Colombian pesos that would be COP 3.318,8 billion with a growth of 22.1%. The organic growth behavior, excluding Cameron's Coffee, is 0.1% in dollars and 14.5% in Colombian pesos. Tresmontes Lucchetti has a growth of 11.5% in Chilean pesos. When we include the devaluation of 17% in the Chilean peso vis-à-vis the dollar, revenue decreases by 5.5% -- 5.1% in dollars. This is completely reverted when we account for this in Colombian pesos, as we'll see later. In coffee, we have an organic growth of 19.4% due to the increase -- or the acquisition of Comeron's Coffee, we increased to 67.5%. And exports from Colombia are significant and the [indiscernible] have $213 million, with a growth of 11.6% in dollars. And go to -- going now to Slide #9, where we combine the accumulated sales -- national and international sales. We have total sales for the end of September for COP 8.178,3 billion, with an organic -- with a growth of 13.6%. As you can see in the bar graph is all businesses are growing except consumer foods, which are retail food. And ice cream, very close to the previous levels in the previous year. And these 2 businesses, both ice cream and retail foods, are having a positive trend, recovering the revenue. If we exclude that, we have a growth of 71%. Sales from innovation were 20.2%. Going now to Slide 10. We see that when we realize the distribution of revenue by region, sales outside of Colombia were 40.6%. In the U.S., it went from 8.9% in 2019 to 12.3% this year, and it's now the second geography for Grupo Nutresa. The third is Central America with 10.2%. And the third is Chile with 7.5%. As I said earlier, Peru and Mexico had challenges in the future because those countries, our portfolio is more focused on impulse categories. And now talking about things that have to do with profitability. Slide #11 shows some information about raw materials. You can see on the left side of the slide, the commodities index for Grupo Nutresa, where we see that this average index from January through September has a level higher than what we had last year. As a result of an increase in prices in general for all our raw materials during the third quarter of 2020, here the rate of exchange has a final cost of the interest that we import, those that are next to the dollar. The average accumulative rate for this year is higher by 14.2% than 2019. And this affects our raw materials costs. As you know, Grupo Nutresa have a strategy to manage this volatility risk in currency and in commodities. We have enlarging futures and with physical inventories when the conditions make that viable option. Now José Domingo Penagos, our CFO, will complete our other aspects about our profitability. Thank you very much. Go ahead.

Thank you, Carlos Ignacio. Good morning, everyone. Let's -- I'll talk about the profits -- about the EBITDA for the third quarter, found in Slide #12. In this quarter, we had a EBITDA of COP 370,000 million (sic) [ COP 370,5 billion ] with a margin of 13% and a growth of 7.6%. As you can see in the graph, we have very good results. We have growth in EBITDA in most of our businesses, 4 of them grew double digits. In the case of retail food, which is peculiar in this situation, we showed mostly the quarantine and physical distancing that affect the revenue during the quarter. The business parts mentioned also has another peculiarity, 2 months of street quarantine, especially in Colombia, and 1 month of gradual opening. And we must add to the measures of job protection measures that we implemented here, and we have shared with you in the various conferences throughout the year. A general framework before we go into the numbers. First off, as we mentioned previously, the group is focused on prioritizing health and well-being of our employees. Clients and consumers. And this is why we are operating with the most strictest measures of cleanliness, protection and biosafety. When you speak about profitability, this means additional expenses. And these expenses, as a result of the pandemic, have managed mostly by implementing the operating expenses that we have for administration and sales and even some operating expenses throughout the entire value generation line. This is the general area of the results. And if we were able to summarize the profit equation during this period, which applies for the accumulated and for the quarter, the first thing would be some revenue, which is healthy. Good business performance, a significant pressure on cost. It has more effect on this quarter and it has an impact on gross margin. And the management of this value equation is managed by the cost. We'll see the results -- show the growth of the results in sales and and then takes us back to the value equation. And going back to the numbers, business-by-business, we'll start with biscuits. Here, we have a good balance -- commercial balance, as we said, in the general framework. It applies very well for this business unit, growth in Colombia and International. It's very good sales, good balance in our -- close to 50% inside and outside. And if we add to this management of the expenses, it helps us balance the pressure by raw materials. We have double-digit growth in some of the raw materials. We have like sugar and wheat. In fact, these are the ones that are referred that have double-digit growth during that period. This allows us to have the margins and the EBITDA. And in the cold cuts, the double-digit growth that I mentioned in revenue also helps a lot to dilute the fixed expenses. We have a cost pressure, which is significant, but there are scales -- economies of scale, expense control, like logistics, distribution, marketing, help balance this profit equation in the cold cut business, which has a growth 45% in the EBITDA. In the chocolate business, we have mixed commercial balance. We have a recovery in volumes especially in Colombia of the impulse categories that we mentioned in the first conferences, which were more impacted by the early months of the year of this COVID contingency. We had some recovery and they have very good profitability, which helps a lot with this balance with the EBITDA, with the chocolate business unit. And we must mention there will be some challenges in the International, Mexico, Peru, already mentioned. And in the cost of the impact on the commodities have been very heavy, close to 45% of the market is included in this category, growing at -- almost at 45%. Efficiencies in the investments in marketing, logistics and in distribution, has a key elements to recover or to rebalance that equation. Then we have the coffee business. I'm going the order of the slide. This is the business dynamics in the period, growth of 24%, and this helps a lot also to dilute the expenses. This is a very good business with higher participation of revenues. International revenue, if we take Colombia as a basis, we have good control here of expenses, which helps counteract the effect. We have a very significant impact because of the increase in the cost of the prices of coffee. And this business, the raw material cost is only a percent of the cost. In the TMLUC, we have a margin of 13.3%. We have 13.3% growth and 1.5% increase. We have good mix of sales. It also allows us to contribute to where we have profitability and to manage the cost pressure. The devaluation in Chile, we had the same impact. We had devaluations probably, as Ignacio mentioned, there is a 17% devaluation. The Colombian peso was 18%. That means on the basis of the raw materials, we have a pressure on these raw materials based on those devaluations. In retail food, we have -- we might remember that we have 3 -- almost 3 years in one, the first 2 -- 12 months with confinement and now the gradual rise in the first quarter. That recovery or the opening of our stores during these last months has improved our revenue. So we must point out that their idea is maintaining these installed expenses and good negotiation, a lot of assistance, a lot of support by the owners of the stores during this period. We want to point that out. We have a positive figures, 7.5%. When we have opening, the good profitability of home deliveries in personal sales, which helped a lot in the fixed expense management has also included in this business unit and rental, which is a lot of significant expenses. So consumer or retail foods is positive. And I'll point out that -- point out more than that is a trend, which has been recovering as the gradual economy opens up, where we operate. In ice cream, we have healthy margins, 16.8%. And the same period last year, it's minus 4%, but we also mentioned that we had those challenges. So the efficiencies in marketing expenses, in logistics, in general throughout the chain helps us a lot through the high-margin by [indiscernible]. We have -- still we have a margin of 18%, very good revenue, good business performance, expense management, even when that performance has not been -- has also been affected by the expenses, but it has been able to absorb the pressure on raw materials, which is affected by those rates of exchange. But still, we can have a very good balance in profits and value. That is a summary of the [ foods ] in this quarter. As always we give you more detail during the period. And more general than the accumulated figures. So if we add the results for the third quarter to the first 2, the accumulated EBITDA, as you can see in Slide #13, is COP 1.1 billion, with a margin of 13.7% and with a growth of 12.5%. It's better than accumulated for the quarter. We also have the positive results in the major businesses at profit levels through -- with growing more than the revenue. And I could emphasize coffee, ice cream, pasta, cold cuts and biscuits. These accumulated figures allows us to compensate it for the cyclicality of the expenses. Those of you who know that over the last quarter has an accumulated expenses, more expenses, and this will help us manage then cycling, which is already -- we're already on that. This is about the event. Let's see the results of the -- the results for the quarter in accumulated. The first is Slide #14, it's the P&L for this period. We have the context. I remind you that for most of the quarter, we operated in physical distancing, quarantine. And this was gradually released according to the local government provisions. In the geographies where we work all jurisdictions are different. They are not the same in different countries. They were all different. In general, gradual opening, but very different. Our operation is focused on managing responsibly and efficiently, our resources by watching for the business continuity and achieving our reach to market -- go-to-market to make sure that our portfolio is aligned with the changing expectations and new consumer habits. During this whole period, you've seen how these habits change and the speed with which those changes that take place has been fundamental. Well, about the numbers, we see some figures that have a good trend. We have a growth of double digit, 11.7%. The magnitude is COP 2.9 billion. Again, we have the effect of the 2 acquisitions during the previous year, Cameron's and Atlantic. So the organic growth for that period is 7.7%. And the cost we've been mentioning that, we have an impact of 290 basis points on our gross margin during the period. So we have -- in this good business performance, the response has been the expansion. We have saved by controlling management production expenses, those items grew 4.1%, very low, much lower than the growth of revenue. And in total, the set of expenses went from 34.5% of the sales to 32% of sales. That is 230 basis points optimizations on lower base, but which helps revert that equation to this point, to this level. Some effects on the different in changes of assets and liabilities. We have COP 2 billion here due to the devaluation in the various operations where we operate. In respect to profitability, we have operating profits of COP 263,000 million. Profits grew 7.2% and EBIT going up by COP 117 million goes to 76% and the margin grows 1.2%. In post operations, we have financial revenue due to our cash position, you saw that in the balance sheet. We accumulated close to COP 900,000 in cash. I'll refer to that later in our debt section. But that shows you why we have financial revenue growth and financial expenses have been capitalized for that decrease in the growth of rate of interest in our debt is variable. But we started to fix our positions for debt or the rate of -- debt interest rate in this volatility, as we think, we still see some room to improve our liquidity in the market. About taxes, we need to have explanations. Mainly, that increase is due to a lower amortization during this year compared to the previous year 2019 and the recording of future benefits for some operations in the group. We have practically more profit during the period and lower fiscal reduction for the period. These are the 3 items that I'm going to give you some numbers later on. So we have net profits of COP 140,000 million, higher by 7% to -- than the same period in the previous year. Slide #15 shows our state -- our results -- accumulated statement results, a growth of 13.6%. We mentioned that organic growth is 8.8%. If we discount the revenue from capitals [indiscernible] food service during this period. The margin was brought was 230 -- was margin -- less than the -- for the quarter in -- not to repeat, that is why why we optimized expenses, an improvement of 240 base points on that basis. And it also helps us balance that equation. We see that this is growing also almost 13% and have close to COP 800,000 million. The EBITDA reference is COP 1.1 billion, which is 12.5 -- 13.7, growing at 12.5. Financial revenue also as a result of the cash position and the financial expenses. Exactly the same concept that I already mentioned. So about the taxes we have a current and deferred taxes. In general, we go COP 54,000 million. In percentage, it grows 39%, and then it has an effect of 400 base points so as a result of this, the items that I mentioned, I'll give you that. First is that we have a liquidation of a good partners in ship then Chile had some tax benefits in 2019, that corporation is no longer. And so we have that effect. However, that, that is 14,000 billion. One point of those mentioned that I mentioned of the interactive rate. That is 25% of our weight of that increase. The second is lower benefits fiscal guidance. We ended 2 -- legal stability contracts ended last year. And that 20,000 of 54000 or 1.5% of that 4% of the total effective rate or 15% of that 39% we already have a second item. The two that I mentioned have to do with those that had in 2019 are no longer in 2020. What do we have in 2020 that we didn't have before? More [indiscernible] taxes. We have a significant set of taxes. Donations, withholdings on foreign sales. It's a significant set that is 24,000 to 54,000, and 1.5% also that for and the 37% of the weight or 15% of that. If you take that, you can do the building loss, all those decreases or any increase our taxes that we have mentioned. And after that tax event effect, we have an effect of COP 469,000 million, which grows 13.8% compared to net profits accumulated during the same period last year. So I'll end this section with the debt position, cash, CapEx, working capital, the indicator, the debt net to EBITDA is below 2 -- 1.99x. The average rate of that is 4.1%. Cash generation, which you'll see in the financial statements, I think that are close to COP 900,000 million. And the result improved our cash flow -- operating cash flow. We have a small debt at the beginning, as a prevention as a result of the pandemic -- already payback almost 50% or 60% of that cash. So our cash position and generation of funds is good. Our CapEx, we've had with budget, which we optimized that, need to be careful and we told you about the same scenario for our city scenario. We have close to COP 300 million still to execute in CapEx for the year. So of which we have almost half, COP 160 million is what we've complemented so far that is less heavier towards the end of the year. We have some payments that we will be accumulating. So this reflects our financial position for the group and with that, I will end this section to give the floor to Carlos Ignacio, again, who will share his vision for the end of this year, and then we will have our Q&A.

Thank you, José Domingo. Okay, talking about the outlook, I'd like to start by saying that commercially, we foresee positive business dynamics for the last months of the year and although we will not have the same peak at the same at the beginning of the year during the pandemic, we'll try to create some additional inventory. This is going to be good growth. Let me tell you that our gradual opening in each country where we operate and eventually any closures will affect our sales in restaurants, ice cream shop [indiscernible]. But I want to compete with this positive addition of the commercial, we say that our strength in distribution, channel development, the proactiveness and the flexibility allows us to project a good outlook for sales next year. As far as profits as José Domingo said, we foresee at the end of the year with cost pressure because of the higher cost of raw materials, fluctuations in rate of exchange and with some of the expenses associated to care protection of people, which will be -- will continue to be installed as long -- if we don't have a solution, which we don't see that in the short term. The most important measures have to do with social distancing, the use of personal protection equipment and with isolation of the most vulnerable people of those who are suspected of having the disease. Historical behavior of the profits, I've mentioned earlier, is lower than in the last quarter for the year. But considering the existing bases, especially the programs that we have for efficiency and productivity that we have going on, we forecast a good closure with the proper value generation. So this is a very positive outlook. And commercially different from those panic peaks during the year, but more pressure on the profits, but we've had good, good programs to allow us to project a good end of the year. Now I give the floor to Catherine Chacon. So we can go through our questions-and-answer session.

Thank you, Carlos Ignacio. [Operator Instructions] The first question is from Juan Andres Gallegos from Porvenir.

We would like to know the WACC objective target or the range?

Okay, thank you for being with us. I'll give you an answer. Our target -- you know that WACC is variable over time, and we're talking about a 10-year plan. So the target we're working on is WACC plus 3%, that is plus 3. And we are looking for changes. We will change that target. That is the goal we're aiming at. We think that this is challenging. And we believe that demanding goal will help the company to keep evolving in a positive manner.

Thank you, Carlos Ignacio. The second questions are from [indiscernible] from Bancolombia.

And I have two questions. Can you give us more information about the performance of the retail food business after the economic in September when it opened vis-à-vis the other quarantine months? And what we just mentioned, but I'll ask, again, could you give some reference value for that return on capital? What is your estimate? Answer the first question, for the second has just been answered.

And thank you for your being with us in this conference. Yes, I'll be glad to answer. As you have seen, not only in the case of Grupo Nutresa, but all over the world in restaurants sector, ice cream shops, in consumer foods or retail foods, this has been a sector that has been hard hit, especially by the social distancing measures that have been used as prevention to prevent propagation of COVID-19. Our biggest impact was around April when we had sales that were 40% of what sold in previous years. That has been changing, improving. First, because of the development and implementation of new capabilities, many of them are having to do with digital. We mentioned that in the previous results conference by developing our own sales force of deliveries and call centers, home delivery and renewed capabilities. And I mentioned that in the outlook, we are still exposed to that dynamics of gradual openings and closures around the world. I give you some figures, which are very general. But over the last quarter, in the first month of last quarter, we had -- we sold 62% of what we used to sell last year. In the second month, we sold 69%, and in the third month, we sold 82%. As you can see, it's a recovery curve, which is progressing, both in ice cream shops and restaurants. Physical sales are higher than the home delivery, which is an indicator that people are being able to go pick up their delivery or sitting down with some distancing restrictions in the shops and enjoy their food. We also mentioned -- José Domingo mentioned in his presentation that I had already come back with positive EBITDA. That's a very important symptom. In the previous conference, we projected that in ice cream shops, we would be getting back to 100% of sales at the end of the year in December. And the rest of restaurants would be back to that in the next following year. Let me tell you that ice cream shops are already selling the same as we had last year. Obviously, the accumulator still will be seeing the impact of lower sales in some months, but the Central American and Caribbean ice cream shops are selling the same as we had last year. And recovery in other restaurants, as we mentioned, is doing well. In the report, I mentioned that Q3 sales were 3.1 compared to the previous quarter. Let me tell you that this pandemic is something that mankind hasn't gotten over yet. We are being careful in restaurants, and I'd like to remind everyone the priorities that we've had with the biggest conferences in Grupo Nutresa. We are taking care of people, health and lives, and we are complying with our mission of food supplying, having food on the tables of the homes of where we operate and recuperate with public and private allies to become part of the solution. So this is an idea item on how this recovery is coming along?

Thank you, Carlos in. So the next question is from Valentina Martínez from Bancolombia.

Have you evaluated some chance for inorganic growth? Or are they still going with that strategy of cash preservation to face this difficulty?

Thank you for being with us. As you were able to -- as you heard in the presentation, the company has very highly controlled debt levels, and we have good cash. And we are looking for higher inorganic or greater inorganic growth. We have said that we're not going to have only just having more sales, while our acquisitions are going to be very selective, looking for new capabilities, access to new markets. And that we should -- adding those capabilities of these companies who had already had to have access to businesses that we can make them bigger and more profitable. We haven't done yet because we've been able to find businesses that meet those conditions, but we're intending to do some organic growth. We're looking for opportunities. We haven't given up on that. We believe that the company is perfectly possible to continue to grow organically.

The next question is from Daniel Guardiola.

Why does the company couldn't get their guidance for ROI in 2020? What were the lessons? And what are the leverages that you intend to use to have the ROI grow more than constant capital? And second, can you give some more details about the price increases in Colombia? What is the change of mix? And what is the increase in prices?

Let me take you the first one, and Carlos Ignacio will answer the second. We remove the context when we started 2020, we did not include the returning that the idea was to double size with a specific range, which was 12% to 14%. Very soon after we launched [indiscernible] and after we embraced TMLUC, which has a significant part of our capital in that we lost our goal of having some returns on our capital invested capital are higher than the WACC. And we hope -- we spoke about inspiration. This is also applicable to 2030. But the actual goal is fixed was go over the cost of capital. When we were started, we were at 80%. We -- since we launched that goal, we improved at 8% by 200 basis points. And now because of the WACC, we have a role, which is higher than the cost of average capital. We are working on all the items, not only only one, this is a balanced equation, the increase in margins and discipline of CapEx, which we've been managing that over the several years, the working capital. Also the 3 key elements: inventories and suppliers. And especially in those we've developed the solutions and inventories, we still have a lot of opportunities. So the specific answer is -- the lesson is consistency of the goal and the plans. And those are the things that we are -- we've been promising. It's the same things that we are committed to in this new goal, which Carlos Ignacio mentioned, of having a plus 300 as an official goal based on a very well balanced equation profit, CapEx and working capital. As far as the second question, Daniel, and also thanking you for your being with us. I'd say that the detailed analysis is more complex in that the answer would mean because we have more than 2,000 references in our ratio of price to volume, usually explains in tonnes of kilos sold is very different by category. I'd like to point out also that when we analyze the change in prices, we usually include not only the changes in price over the past month or past quarter, but also those that have been carried out throughout the year. And as you remember, towards the end of last year, we were talking about the impact of the valuation on the cost, and we had some changes in prices that we implemented at the end of last year, that had to do with improving our profitability due to the impact of demerging, which we're seeing the accumulated effect during this year. So what I would say is that, I'd also say that in the areas -- in times of highest peaks in demand, production wasn't prioritized by giving more room for those references that are essential references, and that also creates some variations in our blends. This isn't a major average. This is a figure that you see here due to the change in volumes and prices and grand average. We believe that most of that effect comes from the change in the mix from having -- stop selling industrial products, which are a lot of tonnes, but lower average price. And cold cuts has had such an outstanding year, which are product, which are significant price per kilo product. So it would be difficult to go business-by-business and reference by reference. So I would like to put your mind at ease that we have been growing significantly. We don't see any signs of any significant effects that are worth going into details. And part of our challenge is to continue growing. What is the biggest change in the market itself, the market itself, and that is why our pricing model changes or increase their prices -- changes in prices and model and volumes. And every time we talk -- we touch a price, we analyze that, what would that imply for our volumes in that reference in what channel and in what geography? And we manage that so that, that combination can be positive for the group. Obviously, there are pressures, as we mentioned earlier, on raw materials and some in expenses, but the biggest source for not affecting profits is our productivity efficiency. And that's what we're going to try to work on first to avoid two big price increases at Andean when the consumer's pocketbook is hit the hardest in all countries where we operate. That is the answer that I can give you, Daniel, and thank you for being with us.

Thank you, Carlos Ignacio. I will start with the questions through the audio. We have a question from Mr. Felipe Ucros from Scotia Bank.

Well, congratulations on the results. As you said, the results were -- only had real month of reopening in Colombia, now that we have a second month, have you seen any differences in the outlook? Anything about retail foods, but can you give us more details about what you're seeing in the rest of the businesses? And the other question I had was about the new goal for 2030. You spoke of digital transformation at 20% of our revenue coming from digital channels, how do you define what is digital and what is not? For example, do you sell those sales to the aggregators, is that accounted as digital or not? Understand what is included in that digital? So to understand what that means.

Thank you, Felipe. Thank you for being with us in this conference. And I'll begin to answer your two questions. The first one, yes, September was the first month with a higher level opening in Colombia. And October is similar with some closures, but still small. That confirms the positive trend that we saw at the end has continued. What we've seen is that September and October have been very good months for sales. Very good in sales and sales outside of Colombia, as I mentioned, have to do with the devaluations in the countries where we operate. But the trend in consumer foods in October continues to improve compared to September. October was better. And that is why the comment is positive for the last quarter. So this is a very good trend, commercially. We just closed a month -- actually, I cannot give you any ideas of profit level in what I said when I talked about the outlook, is still valid. That's the first question. About digital, I'll give you a short comment. Until 2016, we had a number of activities that had to do with digital. In 2016, 2017, we did a big piece of work together with an international consulting firm, Accenture, and we reviewed everything that we were doing vis-à-vis what other actors around the world who are doing as digital and we've found that we are mostly acting -- doing marketing and sales and management of ecosystems on our networks. And we analyze the degree of maturity of each company and we realized that actually, our strategy, our digital strategy is strategy for capacity. And as [indiscernible] mentioned in the World Economic forum, before visual transformation, we have human transformations. This has a human -- major human background because technology itself in the hands of one organization can produce very different things from another company. So we have to get ready to make use of technology. So we had -- between '18 and '19, we had several work forms to implement new capabilities in Grupo Nutresa We added the leadership concepts flexibility, adaptability, speed And we had -- I'l go with the definitions in who have a complete digital transformation strategy, which is, as I said, a capability strategy. So when we speak about digital, this is something that affects the human part, but which also -- our strategy is not the technology. Technology is a major enabler so that we can achieve our objectives. Specific achievements, for example, if I compare 2019 to 2020, in 5 months, we're multiplied by 2.5. Our sales with digital customers multiply by 4 times through our aggregators, is 2.48x in restaurants at 2.2, and we went from 8 in e-commerce to 18 e-commerce. And we've been working on the appropriation of new technologies, including -- yes, we're not going to detail with some spaces for experimentation and building cases of use. Technologies, for example, chatbot, CD, machine learning and RPA. In each one of those, we've been working. And during the year 2020, we've implemented more than 50 cases of uses of new technologies in our group Grupo Nutresa business. This is a very intensive area, but what we see normally outside is the effects is the consequences of what we do. Specifically, in digital sales, we have a major discussion. Today, if we would like to add. We are highly selective if we add to everything we almost all our sales are digital, but we wanted to those that have their origin mainly in a context through digital means not those that you do, the definition means and that are supported by technology. This is an internal definition, but that is why we just want to speak about the goal is -- this is the demanding part of that goal. We're highly active, and we are looking at this very humbly because we have a lot to do and a lot to learn. And this is part of this battery in this set of new capabilities in Grupo Nutresa wants to put into place to ensure our new goal. That is a summary of a little of what I could tell you about the digital.

Yes, very clear. Sales expenses were only 1%. A major achievement in terms of efficiency, but being in [indiscernible] helps. We have to promote the possibilities of doing advertising have been done for most industries. What do you think is a sustainable place when we overcome this COVID period? This would be more -- what do you think will happen after this?

Speaking about structural sustainability about -- this is difficult. We've had like 3 years in one and the same quarter was 3 different months. What I can tell you is that as we have the pressure -- as long as we have the cost pressure, the responsibility productivity in different groups of areas and logistics, marketing, and even administration. So our commitment is more on the entire equation for the EBITDA. Expenses represent the need for going to market and the pressure that we have on cost. That is the original question, but that gives you more on the EBITDA and the -- more than the expenses right now.

[Operator Instructions] Julian Ausique from Corredores Davivienda.

My question is, specifically, about the results of the quarter, about the plan to repurchase shares, have you have anything to say about that? It should approve, but what have you been thinking about that?

Yes, Julian, thank you for your words and for being with us in the meeting. Thank you for reminding this topic. The shareholders assembly in the last meeting approved a purchase to -- repurchase share, which is going to be implemented in over the next 3 years, which the Board of Directors is constantly reviewing and analyzing according to the market conditions. What I can tell you so far is that we haven't decided to take that step. It's an option. I mentioned it in some previous conference. This is an option. This is not an obligation. It's part of the topics that we are constantly analyzing at the Board. This is alternative we have available that could be implemented anytime during 3 years. But there's no additional details that I can tell you about, and thank you for being with us.

No further questions. I will give the floor to Catherine Chacon.

Before we end, I'd like to thank you all I'd like to highlight the importance of this plan that we gave you, and I want to reinforce the balance that you have in our various objectives, not only economy, but also social and environmental. Organizations like this to exist, to endure, to generate value must be connected to society and the stakeholders, there's a major effort. We didn't have any questions about this topic, but I think this -- that we are constantly working on those fronts. Also that companies like Nutresa show that it is possible to generate economic value at the same time as we have positive effects on society. Everyone, thank you for being with us. Take good care of yourselves. Thank you very much. Thank you, everyone, and thank you for your company, for your questions. And any additional questions or concerns that you have on the results, as Carlo mentioned, in our new goals for 2020, we will be answering through our Investor Relations department. Thank you all, and have a happy weekend.

Thank you for your participation in this. You may disconnect now.