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

Good morning. Welcome to the conference results for the second quarter of 2021 for Grupo Nutresa. At the table, we have Carlos Ignacio Gallego, President of Grupo Nutresa; Jose Domingo Penagos, Vice President of Corporate Finance; Santiago Escobar, Director of Corporate Finance; and [indiscernible], our new Director of Corporate Finance, whom we are welcoming to this team. My name is Catherine Chacon, Director of Investor Relations. Thank you very much for being with us today. After the presentation of the results for the quarter, we'll have a Q&A session. [Operator Instructions] If you want to follow the slides in Spanish because by default, or in English, you can download them from the platform. In addition, if you are connected to the webcast, we remind you that you can change the medium language, pushing the icon configuration. I'll give the floor to Carlos Ignacio Gallego, President of Grupo Nutresa.

Good morning. Thank you for being with us with the conference. To start with, I invite you to go to Slide #2 to share some of the events of interest for this period. And we'll start by telling you that on July 7, we completed the acquisition of Belina, which, as we said in the slide, it's a company with 15 years' experience in the manufacture of pet foods in Costa Rica. And at the end, the value of the transaction was $29 million. After the adjustments we agreed with in the purchase sale agreement over the last 12 months, Belina sold $37 million with an EBITDA of 20.4%. All 3 lines, pets, farm and agriculture. The most relevant line is the pet line where we have 70% of the sales approximately, which is done through brands of their own and brands recognized in the Costa Rican market such as Balance, SuperKan and the distribution of the products. With the acquisition, as we've said, we have access to the pet food market, which has a very positive dynamics for growth. And we are initially intending to create a presence in Costa Rica and Central America with the idea of building a regional business. Belina allows us to go into that road with brand known, whether they're well-known, appreciated, well distribution and a very good team that will continue supporting us to develop the strategy. The results of Belina will be consolidated as of July 2021 in the category of Others within the group's financial information. Santiago Escobar, who was working as a Director of Corporate Finance as of August 12, '21 will go to the develop the business in Costa Rica from the pet business, and we wish him a lot of success in this new role within the organization. And as we mentioned during the introduction, the new Director of Corporate Finance is [ Diana Bernal ], a professional with a broad experience in this sector, and we welcome her to our team in Grupo Nutresa. In the next slide, let me tell you that Grupo Nutresa was awarded as the second best company to attract and retain people in Colombia, and the first in the food sector in the country according to monitor of MERCO Talent, monitor for 2021. The steps that led the company to take -- keep this position include the growth, personal growth, professional growth, support of the family, the creation of expectations, the promotion of healthy habits and the promotion of leadership styles. We're very happy with this distinction that exhausts our idea of fostering organization in the culture, which is focused on the care of people, recognition and respect for human beings. People are -- those who make reality the plans of Grupo Nutresa and that is where we're glad to share this recognition. And as a third issue in this introduction, Slide 4, speaks to the chapter of others. As part of our strategy of diversification and learning and growth in innovation, Grupo Nutresa has been incubating and strengthening different initiatives that enable us to have -- go into new categories, expand our portfolio and go to other channels and other ways to reach the consumer. These initiatives are currently consolidated in the chapter -- on the chapter under others. Many of you are known about that. And the sales of third-party products to Novaventa, our micro entrepreneurs such as Benet and Evok and the food service and the distribution of complementary products through La Recetta. During the first quarter of this year, this chapter created sales for COP 172,000 million, and it has become an enabler of the group's profitable growth through increasing sales' scale initiatives and trying to improve health and nutrition. Because it is an interest with our related groups, we're going to include the evolution of this chapter in others as part of the presentation of the quarterly results presentation. After these 3 issues, let's go to Slide #5 to talk about the organization sales. As you can see, revenue during the first -- the second quarter has grown well, both locally and internationally. The restrictions to mobility to the -- associated with the pandemic have been more flexible. This has enabled us to increase consumption outside the home and in more discretionary categories. In Colombia, the period of the second quarter was affected by public order situations, which made major challenges in operations and made it difficult to get products to some parts of the country, especially in Colombia, we reported a growth of 15.3% in sales, which came to COP 1.765,2 billion with positive results for most of our business units. Highlighting the growth in the consumer foods were foods and ice cream, coffee, chocolates and also and others. As we said during Slide 4, as of this date, we're starting the profits and sales for others. We will not include -- in the prices and volumes, we will not include those figures in this chapter. For more details, you can go to the complementary information that we published every quarter. With these adjustments, we will show an increase of 7.1% of the average price. And this is because of the changes in the product mix and some adjustments in prices and higher participation in more valuable products. In addition, we'd like to report a lower volume in pasta and cookies and because they had reductions in the sales of the pandemic. One of the reactions from the previous year during the pandemic was that some of our -- the homes decided to increase the inventory at home, and that was specifically high in pasta and cookies. We had a decrease of 5.4% with a decrease of volume of 11.1%. This is based on a reduction of industrial sales during the period and lower sales in our brands compared to 2020, which had an excess supply. The cold cuts were 3.8% and has a good business dynamics in the entire portfolio. Chocolates reported a growth of 13%, continuing with its recovery of the discretionary categories and in the pastry business. We have coffee with a 28.4% with an increase in recovery in volumes, especially in the category of roasted and ground coffee because of the recovery of local consumption. When I speak about local consumption, I'm referring mainly to the coffee as prepared in cafeterias and other stores. Consumer foods went up to 20.1%, thanks to the recovery in in-person sales and the good performance of digital channels. Ice cream grew 27.4% as a result of greater sales of the various channels and more sales in tourist areas because of less disruptions to mobility. Pasta decreased 1.5% because of challenging comparability to the previous year where we had extraordinary purchases in the category because of the pandemic. And others, we have a growth of double-digit growth in this Atlantic Food Service and distributed in Novaventa and the entrepreneurs. Outside of Colombia, we have revenue in dollars for $318.5 million with a growth of 8.1%. In Colombian pesos was COP 1.176,8 billion with an increase of 3.7%. During the period, we had a revaluation of 4% vis-a-vis the same quarter of the previous year. The total exports from Colombia during the quarter was $79.6 million with a growth of 15%. If we look at this by business, in biscuits, we decreased 8.1% because of the oversupply that we had during the previous year at the start of pandemic. In TMLUC, we had a growth of 6.8% in dollars, which, in its functional currency, was a decrease of 7% due to the extraordinary purchases from the previous year's purchases. Coffee growth -- grew at 7.5% as a result of good dynamics in exports from Colombia and the operation of Cameron's Coffee in the U.S. Chocolate, like in the domestic market, the impulse categories such as snacks, have contributed significantly to the growth of 26.4%. The international operations in retail food grew at 82.2% with an -- continuing with recovery of the sales using the channel and in person -- in personnel and digital channels. We grew 19.6% in dollars due to exports from Colombia, mainly. So in the other chapter, we have good performance because of our distribution through our platforms in the U.S. And when we go to Slide #6, when we consolidated growth 15.3% in Colombia, and international, 3.7%, we reported a growth of 10.4% in sales for the quarter, which came to COP 2.942 billion. These are very significant sales during a period which had major challenges, but this company with its capabilities was able to manage appropriately. After explaining this quarter, let's go to Slide #7 to look at the sales at the end of the second quarter. Accumulated sales have growth nationally and internationally. As I said, driven by the reduction in the confinement in the countries where we operate, the investment of our brands in our sales points and the strength of our distribution networks. In Colombia, we reported sales for COP 3.510,1 billion with an increase of 11.2% in most of the business units. Considering the adjustments about others, the volumes during the period was 3.4% and the average price increased 8.8%. This is due to the effects that we mentioned earlier during the quarter, changes in the product mix, price adjustments in some categories and participation in more valuable products. To compare with the previous methodology would be minus 1.8% in volume and plus 10.8% higher prices. Highlight the good behavior of the retail food, ice cream and chocolate and the others behaviors, which have growth -- double-digit growth during the quarter. In the biscuits and pasta, we have growth of 3.8% and 9.2% (sic) [ 2.9% ] due to lower values based on the year with oversupply in 2020. The good business dynamics in the various channels had positive volumes. If we look outside of Colombia, the revenue in dollars, $624,6 million, with a growth of 6.6%. In Colombian pesos, it was COP 2.265,6 billion with an increase of 4.5%. The total exports from Colombia during the period was $159.5 million with a growth of 13.7%. In general, we have good performance in the quarter, except with the biscuits, which was affected mainly in the U.S. and Colombia. And Slide #8, we see that as a result of the positive business dynamics, both locally and internationally, we have sales for this quarter -- for the quarter, COP 5.775,7 billion with a growth of 8.5%. Innovation sales at June was 16.9% of sales in here. We say that this indicator includes the innovations of products and experiences we launched during the past 3 years. We have references that are coming in, others are going out, but it's still -- innovation is still an important factor for growth. I'd like to make an aside, as you see in this graph, although biscuits and pasta are decreasing vis-a-vis the previous year, if we compare that to 2019, it is minus 7.9% in biscuits versus 2019, it was plus 7%, and that minus 3.1% in pastas is plus 20% if you compare that to 2019. That's where you can see that these are not categories that are going through any crisis, but rather last year, we had some huge demand peaks, and that is why the -- compared to previous years is so challenging. But in general, I would say that this is a quarter, a very good quarter given the circumstances. And in the previous year, we had 2.5 months without any effects of the pandemic for COVID-19. So this is a very good semester. Going now to the next slide, we can see that sales by region. Sales outside of Colombia was 39.2% of our total. And if you see the first geography was Colombia with 60.8%. The second was the U.S. with 11.8%. The third one was Mexico, Central America with 9.6% and the fourth was Chile with 6.9%. I always said that this diversification in geographies is very important for Grupo Nutresa. It gives us a lot of opportunities besides it's -- the portfolio of geographies gives us a very special risk profiles and makes us able to use all the advantages and opportunities. We have highlighted growth in Dominican Republic, Mexico and Peru, which grew higher than the average. And now going into profit issues on Slide 10. We show you the commodities index for Grupo Nutresa. This average index for the second quarter has a higher level than what we had during the first -- last year. With a higher reference price of almost all our raw materials, most of them have double-digit increases in prices. This is a higher volatility. Globally, continue implementing a rigorous proactive coverage policy. We are also use the diversification of categories. Let's just not depend on a single commodity, but it is a very challenging time. Many of you have heard, not only around the world of the foods that we are facing possibly a super cycle in commodities, and this -- we've been managing. It's nothing new to us for managing risk in Grupo Nutresa. Now I'll give the floor to Jose Domingo Penagos, our Vice President of Corporate Finance, who will tell us about some other aspects about our profit plan.

Thank you, Carlos Ignacio. Good morning, everyone. Let's continue with slide on profits and financial statements. And please look at Slide #11, where we are going to look at the EBITDA for the second quarter of 2021. Some numbers. During the quarter, we reported an EBITDA of COP 351,000 million with a decrease of 5% and a margin of 12.0% on sales. It's important to make this connection to the previous slide about commodities. We have raw materials effect with a super cycle of commodities in the global markets. And if we enter that, the volatility of -- our rate of exchange in the various countries we operate, this is -- has a pressure on cost and, obviously, on profits and it happens in almost all business units or in most business units. In this environment, in this reality, we have to point out how relevant diversification is on our geographies channels. I'll leave the price chapter for later, probably talk about it during the Q&A, but I'd like to talk about the commodities as an effect of the coverage. It's important to remember that we cover and we don't speculate. We have a cash goal -- rate and we have mechanics and a policy that works like this: have a Commodities Committee, it covers up to 75% of the year-on-year; a Risk Committee, which we involve external members -- experts on this type of market risk; and finally, the Finance and Audit and Risk Committee of the Board of Directors. This government, this whole policy, and they have different levels and attributes. So we don't speculate. In general, in the commodities, we have covered 80% of the entire year where we are operating 2021 and 51% of the year-on-year. This is very active in 2022. I don't want to say that 2021 is ready. We have to keep working on it. But we have pretty well covered compared to the budget. Second, with respect to the rate of exchange, we have a natural hedge of our coverage and revenue in dollars. In Colombia, we have 87% of our coverage. In Mexico, 100%, and Chile is 52%. We've had major devaluations in Chile. We are looking at our strategies all the time. This gives you a context to the figures that I'm going to give you next. In this second quarter of 2021, we had some effects that we believe would be a onetime event. We had over cost because of the public order situation in Colombia, the road blocks and the effects of the pandemic. The first chapter will be only one timing and the COVID effect, and we will continue to have that. We must consider that as temporary. All these effect of over cost is 165 basis points over the EBITDA margin. It's not a major effect on our profit. The logistics, transportation and storage were very challenging during the period. Some comments by business units. Let's start with biscuits. The most -- the biggest business in the revenue. We have an important pressure, an increase in raw materials costs also the increases in volumes both in Colombia and in international operations. It shows you this margin that we show on the graph, some raw materials with double-digit growth and high double-digit growth. In the cold cuts, we have good business dynamics, but the biggest cost in raw materials also have an impact on the profit. This is a quarter with significant increases, especially in proteins, pork and beef and with specific effects on proteins is just chicken of shortages. This is a very challenging period. The cold cuts has a very significant part of revenue from Colombia, and the devaluation has a significant impact on this -- of this important -- of raw materials. But this is indexed in dollars. Chocolate, we have growth in profits, which is 3.8%. And margin is 13.4%, a good product mix, especially during the quarter, especially the categories of confectionery and snacks, which help compensate the increase in raw materials. Cocoa must be one of the raw materials where we have less pressure. But compared to the others, it's a very challenging raw material and -- in the [ existing ] dollars. So the coverage has also helped us good -- show good results for the quarter. And currently, we have a margin of 14.2% pretty much driven by the good business performance in Colombia during the period. And we had good results in margin. It's not lacking in pressures from global markets. It's one of the commodities that has had the greatest increasing trend. In soluble coffee, especially the cost structure has an impact which has an increase of 30% in cost. We have different systems of coverage. It also has to do with the markets where we operate. So depending on the competition and the other characteristics, we have more or less a longer coverage, especially for [indiscernible] coverage. We have coverage. One is for the U.S. and others is for Latin America. We have another -- TMLUC, we have a diversified a good business unit. It doesn't depend on a single category. And therefore, it doesn't depend on a single commodity with a margin of 12.6% this time around, and it has affected by the raw materials. A lot of commodities affected by agriculture, but the packaging material, as you know how important that is, has been very much challenging. The major challenges in China and the activation of demand by China has an important pressure on costs. Packaging is not free from that pressure and the rest of the supply of those commodities and raw materials in general, which are being demanded by China. In the previous conference, I also mentioned that, but this is more emphasis this time around. The containers and the shortage only for TMLUC, but also all for other business units. Then we have the retail food business unit. We have a significant improvement in operations. And in margins, we have a very interesting mix balance between physical sales in the stores and the platforms. For example, the -- which we will call the alternative channels, digital platforms, call centers, home deliveries, all this adds to this period and 27% of our sales. More than the numbers, the important thing is that we have an installed capacity that -- and a new balance for that -- for those sales. We'll wait for the specific numbers at the end of the period, but this also contributes to our profits as a resource of good retail foods. And it's good news for the entire group in ice cream, a very good growth, double-digit EBITDA growing at 26%. We have very good dynamics, that Carlos Ignacio was telling us about. And we spoke about the breakeven point now. We see how the good performance in all business operations have to go above those breakeven points. And then we have pasta, although the obviously decreased compared to the previous year, I would say that it has an EBITDA margin of 16%. That's a margin, which is very healthy. And even with that decrease in volume versus 2020, also allows us to dilute our fixed costs and it has very good profits and returns and cash flow. And lastly, we have the other chapter, which had a significant growth during the period. And this is due to the performance of the -- channel has an improvement compared to the previous channel year of 2020. Mobility has changed and dynamic [indiscernible] has changed and our business have been benefiting from that change in a trend. This is compared about a quarter. We'll give you more details later. And now let's go to Slide #12, where we'll show the accumulated EBITDA for the quarter. In this case, we're talking about COP 749,000 million with a margin of 13% and a growth of 0.4%. Also the impacts of the onetime impact on the quarter are 128 basis points over the EBITDA margin. As you can see, that impact for the quarter was the most significant one we value in the accumulated figures. And the pressure for raw materials and rate of exchange that we already explained or we explained, some of them affect on not all, but most of our units, biscuits, cold cuts, coffee and TMLUC. This is very important with -- for chocolates, retail food and ice cream, pasta and others. This is a summary for our profits for the quarter. And this gives us a basis to understand the financial results that we will be looking at in Slide #3 (sic) [ 13 ]. Remember that the effect of those restrictions that we had on mobility and public order, the impact on costs and the impact on expenses and associated with COVID, which we hope will be onetime expenses. This explains the difference between the growth in cost and sales expenses and the increase in revenues. And it was COP 2.9 billion, growing at 10.4% compared to the same quarter in the previous year. The impact on cost has been detailed already was 120 basis points and gives us a gross margin of 41% versus 42.2% for the same quarter in the previous year. In the block of expenses, especially administration, operating and sales, this is what reflects those pandemic expenses. But in administration and production, we have an increase of 9.7%. That increase is less than the growth of revenue. In sales, I separate them this time, which grew at 14.9%, 15% in some COVID expenses, some transportation and logistics expenses that we mentioned, we hope are onetime events. But very significant that they have 26.4% of sales, although it is too high than we had last year where we were full time -- full in the pandemic. Then it has decreased historically, and this should be a time to highlight it with it very balanced. We should maintain our investment in our brands and our clients. So we must be very proactive and very judicious with the investment in our brands in these signs of volatility. This explains the effects -- of the operating effects. We have a slight increase COP 196 million in rate of exchange. This is due mainly because of our working capital structure and the changes in our rate of exchange on that capital -- working capital. This shows the COP 250 million, a decrease of 0.7% and the EBITDA that I mentioned was COP 351,000 billion, decreasing 5%. On the middle line of the P&L below, is the most significant is the decrease in the financial expenses. That decreased close to 30%, 29.8%. It's COP 23,000 million less than the same period last year. And I'll tell you why this structure -- this has been decreasing over the past several years. If we add to that the effect of taxes, where we have a decrease of 23% in our current income tax due to higher fiscal reductions during the quarter and in the deferrals, which is an increase of COP 20,000 million because of the compensation for fiscal benefits, which we already mentioned in the current taxes, the difference of rate of exchange and unrealized difference in rate of exchange, we have an effective tax from the period of 29.6% compared to 28% previous year. Obviously, we're going to be talking about the tax reforms. We'll leave that for the Q&A, but our effective tenure of exchange for the quarter and the accumulated, we have a good stability as of this time. This gives us a balance in the financial statements. This is less than 1% than the same profit for the same period last year. And when the accumulated figures, the magnitude of the group, this is shown in Slide #14, I will show you more comments in the accumulated figures, an increase of 8.5%, COP 5.8 billion in revenue for the entire group. The effect on the cost is 110 basis points with gross margin of 41% compared to 42% for the previous year. The effects of the productivity and rationalization of expenses, administration production include those sales expense that I will tell you about. We have an increase of 8.6% and in that chapter, we are very much in line with the growth of revenue and the effect of the difference of the rate of exchange in operating assets and liabilities, COP 1,200 million. This is also due to the effect of our working capital structure. And all of this revenue expenses gives an operation profit of COP 541,000 million with the growth of 0.8% with a very -- 10% growth on sales. 13.8% in terms of EBITDA, which is what's important when we mentioned operating profits. And then from the P&L down, decreased financial expenses went down to 27%. And the effective tax rate is 27% of sales compared to [ 20% ] of the previous year. Lastly, the net profits for the semester is the COP 367,000 million with the growth in this case of double digit, 11.5%. And in the last slide, we show you the debt returns and cash flow. I'll start with the debt coverage. We have a healthy sound indicator, 1.91x, very much in line with what we've had in the previous quarters, an average financial rate of 3.58%. That's why we mentioned that I was going to reinforce that in this chapter with -- as well medium average life of 4 years, and we extend those CapEx of COP 131,000 million. Our budget is still COP 431,000 million. We had some delays due to the mobility in a road blockage, which affect our execution, but do not endanger the entire timetable for the year. Our CapEx, specifically, we have -- we think we have the same COP 360,000 million during the year with a higher investment in the second semester. And all of the previously mentioned effects impact our ROI of 8.9% for the -- for this period. Lastly, a short information of the purchase -- stock repurchase program. We repurchased 1,558,115 shares. This is Colombian investment of COP 306 million. We are very happy with the program. And we are implementing an activity, which is something new in Colombia, but we are very happy with that. And this presentation for financial statements, I'll give you the floor to Carlos Ignacio, who will tell us his vision and outlook for the 2021 and later on, we'll have the Q&A session.

Thank you, Jose Domingo. Talking about outlook. I'll start by saying that for the rest of the year, we have positive business dynamics. We mentioned earlier that the combination of the power of our distribution networks, and the strength of our brands, and the investment that we have said that we're going to continue making investments in those brands, let us say that, over the past several months, we will continue to have good business dynamics. In addition, vis-a-vis costs and expenses, we will be having some pressure because of higher pressures in commodities, the volatility of the rate of exchange. I'd also mention that we are seeing some difficulties in the market to get some freight and higher cost of freight. We believe that the associated -- expense associated to our care for life during the pandemic will continue for the rest of the year. These are lower than that previous year, but they will continue. And I would insist that we're going to be making more investment in the market. And because all that put pressure on the margins, we'll be working on our efficiency and productivity progress for the rest of the year, and uncovering our risk associated to commodities and rate of exchange. And these initiatives, combined to the pricing strategies, will enable us to get some good returns. This is, in general, our outlook, good business dynamics and challenges in costs and expenses, working on efficiencies and productivity and will lead to good returns. I'll give the floor to Catherine so that let's give -- open the Q&A session.

Thank you, Carlos Ignacio. We'll start then on the question-and-answer session. [Operator Instructions] We have a question from [ Daniel Caramante ].

Three questions. I'm going to ask them at the same time. About the evolution of biscuits and TMLUC, what is the evolution of those volumes in the future? I'd also like to know the business capability to increase the prices in those different categories based on the increases in raw materials. And how do you expect the sales expenses to increase in the future?

First of all, Daniel, thank you. And [indiscernible] maybe for being with us in this conference. And let me answer your questions. First of all, the analysis in biscuits and TMLUC, I'd like to repeat something that I said earlier. Although we see a growth in sales that compared to the previous year, those 2 businesses are lower. I also said that biscuits compared to 2019, it grew 7%. TMLUC, the sales for 2019 grew 11%. First thing is that, yes, compared to this previous year, they are negative. But I'd like to mention that in a longer series, the trend is positive. And now let me tell you about the details about TMLUC. This is a business, which is a multi-category internally. So when we speak about volumes, we're talking about kilograms. And in TMLUC, we have coffee, we have pasta, we have powdered drinks, we have snacks. So I'd like to mention that Chile, as a country, has had good business dynamics and the country has received some cash injections. The economy has received some important cash injections. Some of them have state assistance programs and others from [indiscernible] city. And what we've seen, and if we look at other regions, is that the categories that are -- basic foods are challenged through 2020. And in Chile, specifically, we have seen them grow. The snacks have grown and growth has been more in terms of snacks. We have significant sales. And [ partnered ] with chocolate snacks where we have made important investments. Growth in coffee and moderation in pasta and some decreases in instant powdered drinks. So as an average volume, I would say that we still, compared to the previous year, they see a lower compared to this panic purchases of the previous year. But we believe in the job, we believe in the country. I think we're doing an interesting job. Chile is a very important platform for internationalization of our group. And so what we see in the future is higher growth. Chile is a geography that the exports have had some impact because of the, not only the hospitals will be available of freight and they are trying to increase their exports as well. But with respect to biscuits, it grew at 7% compared to 2019. And during the protest and the blockage, it was one of the businesses that we had most impact. We have a wheat mill in [indiscernible], which had some impact on that. That's where our sales to third parties, which are a lot of kilograms less sold. So we're going to be recovering -- the recovery in kilograms, the trend in -- we have a trend in a special plan for biscuits, which has been implemented appropriately, good in innovation. We have an important room to grow. We don't have anything like deep structural problems, just compared with the year, which we had some very high peaks. That is the answer to your first question. About prices, we are very careful. When we look at the prices in the categories of Grupo Nutresa, we have to analyze 2 parts. We are acting in a market with free competition. We have competitors in pricing. We'll always do some analysis looking at the reactions of the competitors. We think that vis-a-vis the competition, we have a significant advantages with pricing that we can work on, but we cannot forget another part of the coin with the -- which is the consumers' purchasing power. We believe always in the levels of property, which we call affordability, the ability of not going out of the purchasing capability of the consumers. So if you combine these 2 topics, most of categories, we have room to work, but we will do that not in general or on an average basis, but we're doing that very much focused on each reference on each geography, on each channel and making the decisions that will allow us to continue to be competitive vis-a-vis other actors, and not go out of the consumers' reach even might be to design new sizes. You redesign a product, and there's room to maneuver. We've been very, very prudent, but it is not the only leverage we're going to be working on. I say that the first is -- will always be efficiency and productivity, in addition to innovation vis-a-vis our expectations and needs of our consumers. So in sales expenses, we have said that we're going to continue to invest in the market. These are especially when we're seeing some reactivation with some leading brands that need -- which deserve the support. And part of the business dynamic is due to the power of our distribution network, but that also goes to, hand-in-hand, with our brand strength. We're not going to leave them alone. I'd like to remind you also that we have categories with different levels of expenses over sales. It's not the same, the sales expenses for restaurants than, for example, in food business, so each one has its own dynamics. But we have said that we will continue to invest there. Otherwise, we would be sacrificing the long-term goals of the organization. This is the answer. And thank you very much for being with us. I suggest we go to the next question.

The next question is to Valentina Martinez from Bancolombia. Valentina says, two questions. Although Peru is a geography that only has 200 -- 2% of weight due to the political situation in the -- do you have any changes in your strategy? What is your expectations for the price of commodities for the next quarter?

Thank you, Valentina and Bancolombia for being with us. Peru, in 2020, it was 2.2% of our total sales for Grupo Nutresa. It's a country where we have an interesting presence, but we still -- is still a geography with major opportunities to grow. We can do a lot more. We really -- Grupo Nutresa, we are very respectful of the political decisions in each country. There's -- we don't read that. There are sometimes -- some difficult times. But we are not going to give -- turn our back on the country. We have the idea of remaining there, continue to operate there. We have an important group of employees. We have more than 1,000 employees in Peru, and we reached 117,000 points of sale. So we understand the situation. We are looking into -- from outside, and with the team that we have in the country with our allies how we can operate. And we'll see how the government is going to operate and organize their teams. And we hope that Peru, which is very important, will be a very important in our Pacific Alliance. We can structure the country with the diversity that it has with the social challenges that they're facing that we have in many other countries around the region and hopefully, to be successful. But obviously, we'll do the risk analysis, and we will take measures, but we're not thinking about leaving the geography. We intend to remain in growing and do more things improve. As far as commodities, I'd like to give the floor to Jose Domingo to comment on the outlook.

Yes, of course. Valentina, as we have this activity in China and the market settling into these new demand situations, we believe that the pressure during this next semester, and perhaps in 2022, we'll have that pressure. That's why we're placing more emphasis on our coverage. And our coverage levels for the 2021 is 83%, year-on-year is 50%. So we'll be very, very active in this chapter because we know that it is going to endure. But without neglecting this remark, we will not -- we're looking also to 2022. We have longer structures, and we're adjusting all of our coverage structures. And we have a rolling forecast mechanics that allows us to look at those figures, and we will be very, very active in the commodities market because we will have pressure on that area.

Next question comes from [ Andres Felipe Campo ] from Acciones y Valores who asks, can you go more into details about the repurchasing as process for the next year?

[ Andres Felipe ], thank you and Acciones y Valores for being with us during the conference. Jose Domingo mentioned just some general figures of what we had done so far. Your question is interesting because it looks to the future. I'd like to remind you that the shareholders' assembly of Grupo Nutresa approved the program of repurchasing shares for COP 300,000 million. The Board of Directors prepared a rule -- set of rules. We're working within the framework that's created by the financial superintendents. And those rules that are approved by the Board of Directors, there's a 2-member committee that follows the entire operation. Remember that allow -- the law allows us to work in 2 fronts. First, to participate in the event activities, which is something that is done a few days before we disclose the information to the market. And those purchases are -- have a condition that has to do with the average price in the market. And with the volume that you can trade, we've been working on that. But there is a second way to -- allowed by law, which is sort of something that we haven't used so far. It's too soon to evaluate the entire program. We are happy with it. It means like how to use in Colombia that we haven't been used in Colombia, you can put some sales point. So have some more favorable prices for the shareholders. And it also depends on the Board of Directors' guidance that we'll continue to work within the law. We're still -- this percentage that we have, and as Jose Domingo mentioned earlier, leaves us a very, very large room to operate. We'll continue to use the mechanism as allowed by law. We don't have a definition of the second mechanism, but there is a possibility, but we'll continue to use it.

Thank you very much for your question, which allowed us to talk about our -- the future. Andres Soto from Santa Fe is the next question.

The segment of others is the 6th category in terms of sales. However, there's a very wide mix in the growth and profitability levels. Can you tell us how do you itemize that in terms of sales and EBITDA? Also what are the criteria to assign capital to in each one of those businesses?

Andres, thank you for your question. In fact, the chapter of others has a varied set of initiatives. In the conference, we're trying to open more of these items, but still a block. First of all, I show you that there is -- we have revenues and profits from chapters like the others distributed in our direct sales, [ Rica ] and other companies, entrepreneurs or ideas because it's that chapter of major projects or high potentials. We try to not to be too open about it. As they evolve, we -- that acts as an incubator vis-a-vis other business units that can become as business units on their own right. So with this introduction, let me tell you that, for example, those COP 428,000 million in revenues is a very important chapter, more than half from Novaventa, which has the distribution of their own and third-party products. They are growing and they're growing very well, double-digit growth, and we also have the whole server, which is a significant part of that total, and it's growing at 60% because of the activation of [ Rica ], which I mentioned earlier, in the other companies or the others -- where others are a bunch that are growing, that are incubating there and are reeling on their starting ramp. They don't really contribute to their profits. And reconnecting that to profits, very prudently, referring to others, the greatest proportion comes from those others from these direct sales and the [ Rica ] has had some good profit levels because it has this business display. We will give you some -- we'll say, others and drill others. We have all this internationally. And our platforms of distribution are being used as that as, not only their own, but other third-party platforms, and they're going well and puts all these in project incubation. This is the general context of this chapter, which has a significant sense of assets. And about the capital assignment with the potential returns, and we spoke about the baskets, about the countries, about the various segments, and in this chapter of project incubation, say high, the potential day, that also has a significant role where we will be assigning capital to build a future of the group.

Thank you, Andres, for being with us, you and Santander. I'd say that because of the size that you highlight in the question, is what led us to give you more details about this chapter, which, as Jose Domingo also explained, is mostly 2 issues. Using the power of our commercial networks to use as -- to distribute third-party products that uses that -- this assets and it increases our returns and decreases our cost, and we learn from those actors who we've cooperate. And the second is part of the -- an incubation activity, which we can incubate those and we can -- it becomes a business or it can be in part of an ongoing business. That's where we are going to be speaking about this issue more frequently.

Where there are no more questions. [Operator Instructions] Felipe Ucros with Scotiabank has a question.

Congratulations on the results. A couple of questions from the platform, digital platforms, and perhaps with an update with the plant. The B2B, I'm sure that should follow that, but you are very much developing digital platforms for sales of traditional. I think they are the most highly advanced in the country. Do you have any -- are you going to transform that Novaventa to a digital for this traditional sector? Perhaps, you have that pretty much advanced, I don't know. And the second thing is, some delays in the CapEx for the -- due to the public order situations and there are many companies that have reported delays in their CapEx. So how about the new plant?

Thank you, Felipe for being with us in your conference. And yes, with the digital platforms, I'll go back to the strategy that we disclosed at the end of last year. Our 2020, 2030 strategy where we hope that 20% of our sales will be digital, and we define that we -- what would be considered digital, what the processes we should work on to turn them to be digital. That strategy has been clearly designed as part of our capabilities that we want to have to build leaders in our reach to market. And there are several activities. Although we have digital work in our restaurants, we have our own platforms and our own call center. We have digital platforms in food service, where Atlantic Food Service and La Recetta have initiatives, which are pretty well. And we're working on stores that [ Gorgona ] and other geographies that have been done more powerfully than in Colombia, but we're moving forward pretty well. In our venture capital program, we have one of the investments in [ Rajasa ] is an India company. We're learning a significant reach-to-market activities. Without disclosing the brand or the name of the platform, we are working on that. The idea is that we don't think that this traditional challenge is going to go away, all the way to digital. We're going to have a hybrid world combining physical capabilities with others that are going to give them speed and better service levels. And our capability of serving platforms that are also -- become key. We want to have our capabilities, but also be the best supplier of the digital capabilities of our retailers. So this is doing very well. I think that, in a very short term, we'll have a session with you or those who are with us so that we can tell you more details about the digital strategy. As far as the plant we're building in Santa Marta, there are several works are doing pretty well, almost completed. As you said, the labor, we've had some challenges. I think it's more than in manufacturing. We had a major challenge in freights and shipments based in -- from some North America and others in Europe. We've had some shipments that have been delayed from some items -- have delayed for several weeks, but we are certainly -- we're going to be making our inauguration in the second semester. And at the end of the year, we'll be starting with the platform. So some delays, I'd say that in [ C3 ] in Colombia, the COVID has been working -- impeccably managed. I think that [indiscernible] that plant did not have any delays. We had more problems with our international equipment suppliers and international freights that have -- delays were about 1 month, 1.5 months, but we are going to inaugurate the plant this year. We have other activities in internal campus in Colombia, which have had some, some delays, but the CapEx that Jose Domingo announced, we're going to be using that here. We didn't mention that it was one of the sources that we're going to be investing in a lot of our cash. We have -- you've seen the financial statements that we have available cash. That's one of the sources, our own resources to pay for the CapEx that we have pending. Thank you, Felipe, very much.

An additional question with [ Carlos Gaytan ].

What can you say -- how will you participate in M&A for the rest of the audience? [ Tampo ] is a company in Chile, blank slate in Chile.

It's interesting in that in these emerging companies that are going to be developing capabilities, in the markets, part of our approach way or where we have different ways to approach that. And we have developing business relationships, capital relationships or both. With respect to [ Tampo ], specifically, we are clients of that company right now. We don't have any investments, any capital investment in that, but we do have another similar companies that have about the same trend and the same capabilities in ecosystems outside of Colombia, in the U.S. in Israel, which are very interesting. They are part of -- specifically of our events chapter. So I will speak not only on [indiscernible] are also about our approach events. We want to bring to present value some capabilities that those are being developed right now. And more relevant than the investment is what we intend to present and improve our capital is the memorandum of understanding that we have had with these people. So right now, [indiscernible] which are their clients, and we are very happy with the type of relationship, but we can -- we have to mention it, commercial, capital or hybrid, which should also works very well. I'd like to add that the plant is -- it's something -- is part of our strategy. We are approaching that from different points of view through innovations from existing businesses, some M&A, some joint ventures. And we've made some very important launches. We created and mentored in Grupo Nutresa. We have a special team in Grupo Nutresa. We have a general multi-category plan. Our team for that is very much in line with the food future and alternative for the development of the plant.

Thank you very much, everyone, all those who participated in this Q&A. With this, we conclude our teleconference for results for the second quarter of 2021. I thank all of those who connected, and you have any additional questions, you can send them through our Investor Relations department. Thank you very much, and have a happy week.