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

Good morning. Welcome to the Conference of Results for this Third Quarter of 2021 for Grupo Nutresa. At the table, we have Carlos Ignacio Gallego, President of Grupo Nutresa; Jose Domingo Penagos, the Vice President of Corporate Finance; and Diana Bernal, Director of Corporate Finance. My name is Catherine Chacón, Director of Investor Relations. Thank you very much for being with us today. [Operator Instructions] If you want to follow the slides in Spanish because by default they are in English, you can download them from the platform of the webcast. In addition to that, if you are connected through the webcast, we'd like to remind you they can change the language of the medium player using click on the configuration icon. To start the presentation, I'll give the floor to Carlos Ignacio Gallego, President of Grupo Nutresa.

Good morning. Thank you for being with us at this conference of results for the third quarter of 2021. To start with, I'd like you to go to Slide #2 about the events of interest for this period. First of all, let us tell you that as of July '20, the group -- stock of Grupo Nutresa and other Colombian companies can be traded on the Santiago Stock Exchange. This operation is possible, thanks to the agreement at the end of the previous year between the stock exchanges of both countries, which encourages and motivates double listing of the main issuers from both countries. And to them, the trades -- the shares can be traded with all the facilities of the local transaction and in Chilean pesos for Grupo Nutresa. This represents the possibility of participating in a very liquid and deep market like the Chilean market. Furthermore, those Chilean investors and investment in Grupo Nutresa is an opportunity to participate in the mass consumer dynamics in the vision, which is an option for diversification in organization that has a presence in 16 countries and with high standards of corporate governance. Going on to Slide #3, about business development, I would like to tell you some new initiatives for strengthening our portfolio and internationalization. On the left, you can see Basic Kitchen. On August 11, Grupo Nutresa announced the creation of the Basic Kitchen Corporation, which will focus on merchandising food products, including the brand BADIA, which will reach new regions around the country with our capabilities and with our experience in the distribution, omni-channel distribution on the right. We are not trading. We are aware of the responsibility of the company in generating the opportunities and being an actor in economic reactivation on September 20, we announced the creation of Nutrading, which we used to buy, sell and export products to sell and to commercialize overseas. This new company will be intended to develop an export platform for Colombian companies interested in going along the internationalization path with its brands and products and to mentor these companies and develop capabilities to access new markets. This organization will make available to allied companies a competitive distribution network with a major coverage and the experience in internationalization capabilities. And finally, in this section, going on to the next slide, we like to tell you that for the seventh year in a row, not MERCO Empresas and Lideres in 2021 is a monitor of the corporate situation, recognized Grupo Nutresa as the second Colombian company with the best resources and the first one in the food sector. Now let's go to the Slide #5, where we will share with you the sales report for the period. The third quarter is still with good performance in terms of revenue. And we show growth inside and outside of Colombia. The advances in vaccination have enabled us to make more flexible measures to prevent COVID-19, which has made more dynamic the economies around the region. This is reflected in a higher activity in our channels and higher consumption in our categories. From Colombia, we see a growth of 20.6% in sales, which were COP 2,051,700,000 with a positive behavior in all business units with highlight growth in biscuits, cold cuts and other. Product volumes have grown 7.4% during this quarter. All the business units grew by volume, but the prices on average grew 6.1% due to a better mix in sales and together with some price adjustments. In the biscuits, we had an improvement of 5.6%, which includes 2.8% increase in volume. This is the result of better performance of our brands and higher industrial sales. In the cold cuts, we have 16.4%, thanks to its good business dynamics throughout its entire portfolio and the consumer confidence on our brands. In chocolates, we see a growth of 8.8%, maintains good performance in its major categories. Coffee with a growth of 27.8%, continuously good recovery in volumes with double-digit growth, thanks to the recovery of consumption outside the home. Retail food grows 90.2%, thanks to the increase of sales and the good performance of home deliveries. We have -- compared to 2019, this grew 27.4%. The ice cream grew 24.5%, driven by the opening of tourist areas and higher sales in stores, alternative channels and ice cream stores. Pasta grew at 4.9%, with an increase of 7.4% by volume. The price variation is due to mainly -- due to product mixes. In others, we have a good performance and double-digit growth in Atlantic for service distributed through Novaventa and in the entrepreneurs. Going to international sales outside during the period, we have dollar revenue for USD 340 million, growing at 10.2%. In Colombian pesos, these sales were COP 1,307,900,000, with an increase of 13.6%. Organic sales, excluding Belina, grew at 6.6% in dollars and 9.9% in pesos in Colombian pesos. During this period, we had a devaluation of 3.1% vis-a-vis the same quarter of the previous year. The total exports from Colombia during the quarter is USD 83.7 million with a growth of 13.7%. Some comments by business about sales outside of Colombia. In biscuits, we grew 5.6% due to lower dynamics in the U.S. platform. At [indiscernible] we have growth of 3.6% in dollars in their functional currency, we have a growth of 2.2%. I'd like to remind you that the provision does want to have some big sales during the pandemic. So you see that we had those peaks last year. This 2.2% is a good number. Coffee had growth of 13.6%, mainly due to exports from Colombia. Chocolate, the categories of impulse and snacks will contribute to the 14.8% growth in sales. International operations for retail food grew at 47% compared to the same period in the previous year and 9.7% compared to 2019. In the cold cuts, we have a decrease of 3.8% in dollars because of lower exports from Colombia. The others has a growth due to the sales of Belina, which in the first few months are aligned with the business plan. In the previous conference, we told you that this purchase would be included in the chapter under others. And the -- in Slide #6, you can see that by combining the growth in Colombia, 20.6% and the international growth of 13.6%, we reported an increase of 17.7% during the period with sales of COP 3,359,600,000 and very good dynamics in all our business units. Within this good performance during the period, we can go to Slide #7 to see the accumulated sales until the end of the third quarter of 2021. As I mentioned earlier, the economic recovery and improved business dynamics in different regions of area have been reflected in better performance of accumulated sales, which show significant growths nationally and internationally. In Colombia, we had the sales for COP 5,561,800,000 with a growth of 14.5% and positive results in most of business units. The volumes during the period grew at 0.3%. I highlight the recovery of the third quarter. Remember that we had -- in the previous report, we had a negative numbers, but the average price had a positive variation of 7.9% due to improved product mix and some price adjustments. Good behavior in retail food, ice cream, coffee and the chapter of others has double-digit growths during the year. In the biscuits and pasta, we have 0.7% and 0.2% growth, with improvement during the last quarter. Remember, most of the growth is due to sales mix that occurred during the last year. The other business units have good business dynamics throughout the year and improved volumes. Outside of Colombia, revenue in dollar were USD 964.5 million with a growth of 7.8%. In Colombian pesos, those sales were COP 3,573.5 million with an increase of 7.7%. In turn, the organic growth is 6.6% in dollars and 6.4% in Colombian pesos. Total exports accumulated from Colombia is USD 243.2 million, with a significant growth in 11.6%. With the exception of those goods, we have good performance in all the business units in our international sales. Going to Slide #8. We see that accumulated sales for the period were COP 9,135,300,000 with a growth of 11.7% with -- innovation sales at the end of September were 16.6% of total sales. As you can see, both in the quarter and the accumulated figures show excellent business performance. Now let's go to Slide #9, about sales by region, you can see that sales side of Colombia represent 39.1% of the total. The first geography in sales is Colombia with 70.9% -- 60.9%, the second is the U.S. with 11.5% and the third goes to Central America with 10% and fourth, Chile with 6.4% (sic) [ 6.6% ]. I would highlight the growth in Mexico, Dominican Republic and Central America, which were higher than the average. Now going on to topics that I have to do within profit levels. Let's go to the next slide, where we'll talk about the behavior of inputs. You can see that the commodities index average is higher than what we had during the same period last year as a result of higher reference prices in all the raw materials we use, most of them with double-digit growths. In the company, we've been implemented hedging strategy that has allowed us to offset somewhat the significant growth in prices of commodities. The high place of commodities and the restrictions of international logistics have -- international challenging decreased in supplies, and we're trying to face that with the company's capabilities. These 2 issues we are facing a global challenge. On the one hand of availability of -- we have major delays in ports due to the reactivation of the economy, some demand peaks and also lack of labor, which has led to difficulty in the movement containers and at port. So there's -- it goes beyond a challenge that goes beyond the food industry, and it's taking place in other sectors. We have pressure on the availability and cost and inputs and international logistics to go on. With a report, I'll give the floor to our President of Corporate Finance, Jose Domingo.

Thank you, Carlos. Reading at Slide #11, we'll talk about the EBITDA during the third quarter and the accumulated figures. A general comment about this. It was not -- and vis-a-vis the challenges we've seen in the cost. What I can point out that the -- having the pricing -- new price controls and expense controls have led to these good results. The EBITDA of COP 428,000,000,000, growth of 15.6% with a margin of 12.8%. And it should -- worthwhile mentioning this by business. This pressure on cost is due to this dynamic in this growth segment of raw material rates. Logistics, the pressure on gross margin, we'll see the financial margins. We go back to this balance of the financial segments due to expense control. This enabled us to compete in the various channels. Diversification, as I said mentioned earlier, in this case, in channels, this applies both to the third quarter and the accumulation for this last quarter, we have better performance in volume. This helps dilute the costs and fixed expenses. This is a general framework for the numbers we're going to see. And now let's go through the details of the business. The biscuits. We have the business unit low dynamic -- business dynamics, it makes it difficult to pursue these fixed expenses. This is an impact and this is due to the cost pressure. Packaging materials, Sweden, which is our major raw materials oils & fats. We have an increased between 20% and 30% higher in some cases. So these are the dynamics added to that lower business dynamics shows EBIT of 9.6% with a decrease during the quarter. Then we have the cold cuts. On the other contrary here, we have very good business dynamics. We also have growth in raw materials. In this case, proteins, be it pork and chicken, significant increases, especially during the second – in pork and during the -- and also due to the availability of some African fever, swine fever. And this is just compensated by the business dynamics. It also has a very dynamic pricing activity. It's very active performance in this cold cuts. In chocolates, margin is 14.8%, also high double-digit growth and 19%. So that is sort of -- it's also pressure on cost due to the hedges, I think of the help of that, but this quarter dynamics is partially in the mix of categories, suites and products that have good product levels helps us a lot to the final results for the chocolate business. In the coffee business, we have a margin of 11.8%. We also have a very high-pressure due to raw material costs. Remember that this business unit, the raw material is about 70% or 75% of the cost. It's also double-digit but it's offset by pricing activities and very high discipline in expenses, administration and sales, which also helps balances out this equation. TMLUC, margin of 12.2%, decreasing 2% compared to the same period of last year. And due to the pressure at TMLUC, it’s a very highly diversified unit where we have raw materials growth, they also have and packaging material. They have a very heavy impact on the profits. We also have -- retail foods and ice-cream [Technical Difficulty] In retail food, we have an improvement in margin as a result of that improved dynamics on commercial dynamics, which we just mentioned is very good dynamics and a good balance among channels -- different channels are from our points of sale. This creates a new layer. It's about 25% of our sales and that helps a lot with this support to profits. We also have to add good discipline, good expense control because this is a more of an expense than the cost business. We have a good equation for retail foods. Also, the ice cream margin of 15% better revenue, better mix, very good absorption of expenses, which helped us offset the increase in raw materials. This is not absent from pressure, not all of them are affected by all those pressures. In pasta, we have profits lower that was impacted by wheat. Also raw material is most of the cost in the packaging material which I mentioned in other business units also have a decrease in our profits. Under others, we have a margin of 3.3%. We have different initiatives, good service or good dynamics in every area, restaurants or consumption outside the home. So what we need is the corporate suppliers is not included, but it has very good dynamics in the linear business, which is according to plan like Carlos Ignacio mentioned, we have very good results there. This is the general overview for the quarter by business unit. In Slide #12, we have the accumulated EBITDA. The numbers are COP 1.2 billion, growth of 5.4% and 12.9% margin. And I spoke in detail about the quarter. And it's similar to the accumulated, but under these circumstances, high volatility and difficulties with commodities, [different to] logistics operations. With this strategy of key diversification and diversification in the broader sense of the word, the strategy is working on local supplies. We are very local in each of our operations. We act -- the physical coverage size, we will analyze it. We have an increase in our inventories and even turnover. This is on purpose, we're increasing our physical stocks, our security, our safety stocks, we have increased our working capital. And the profitability in the medium and the long term, this supply of both the financial and physical hedging is fundamental or the time of the issue of pricing. We mentioned that we continue to work heavily on that, the flexibility and speed is going to be on a case by case. General rules are not really applied but the speed and flexibility by business units on a case-by-case basis is going to be key. With respect to the EBITDA, this shows you the mid line of the P&L and helps me introduce the financial statements. First of all, in Slide #13, the profit and loss statement for the quarter -- should I give you some figures and go to the mid line and to the bottom, revenue during the quarter grew at 17.7%, organic and inorganic. If you calculate the -- this is 16.6% and the organic growth is what is more significant in this business dynamics, the impact of what we've said about costs and which have an impact on gross margin, we have a loss of 90 base points during this period. This is offset -- we spoke about the balance of the profit balance. This is offset by expense control. We grew 340 basis points in the entire expenses divided by sales between 2019 and to-date. This is in -- this is shown on the slide. Compared to the previous year, but we compare to 2019, when they peaked, which were 28.5%. And right now, at the end of the quarter, is 25%. So that balance is back here. Under the current circumstances, we find that these productivity plans, the capital –- the strong capacity to reactivate this quarter. It doesn't mean that we will not be investing in brands. On the contrary, with efficiency control in a challenging price scenario, we have to keep investing in brands. It's very necessary. This explains the midline of the P&L. Let’s talk about operating [indiscernible] equal to 23%. The post operating [event] financial revenue, we have -- we have invested these CapEx with this decrease, but this is a very healthy cash position for the end of the period and for the accumulated numbers. And actually effective rate for taxes, 32% plus compared to the previous year, net profits of 19.6% of COP 368 million. So you can see that in the lower part of the income statement, this is something that you don't see, which is the effect of the impact of tax reforms. We accepted a decree, Decree 1311, which gives us a chance to register this impact in deferred taxes between 30% and 35% in the panels. And as you can see in the notes, this is reflected in an account of our cumulative results from previous businesses. If the impact is COP 58 million and the second effect is discontinued operations, we are reflecting a donation. The Nacional de Chocolates make close to 50 growers of some things that we had invested. The growers gave the donation, and this is reflected in the discontinued operations. This donation is nothing but continuing in our encouraging situation in Colombia. We've been doing that for 17 years. We will continue that and we'll continue to buy cocoa from the suppliers on their securing circumstances. We have this -- this strength will help the distributors and the producers to help us out. This gives a net profit of 19.6%. In Slide #14, with the accumulated P&L for the group, we also mentioned some of the figures, COP 9.1 billion, the growth -- double-digit growth, 11.7%. If we remove the effect on Belina, we also grew double digits and accumulated. We have the same thing on the impact of margin project basis points. And the equation is offset to the expense control, a decrease in administrative, operating and sales expenses at 270 basis points compared to the previous year; 2019, 270 basis points. Thus, we have COP 867 million, the same effects after the operation. I mentioned the decrease in financial revenue. I didn't mention the control of financial expenses, which also helps a lot during the quarter and in the accumulated figures, I'll tell you the conditions for that sale, but that this is part of our strategy. And I'd like to mention the effective rate, which is 13%, 90% for the year for net profit, COP 534,979,000 million with a growth of 14%. That's for the financial statements. Slide #15 shows our debt structure and it's something that we like to remind you about the CapEx and others. The debt level, that’s COP 1.6 billion to the net debt position is 1.9x the coverage. The total debt is [indiscernible] The average duration is 4.2, [4.3] years. The fixed rate is variable especially when indexed in local currency. For example, we don't have any exposure. Some tranches of that debt are cover at fixed rates. These are the general conditions for our debt. CapEx for that cash flow, we have a CapEx of 60% of our budget, which is COP 430,000 million. But the execution also is seasonal. We have a large part of the budget for the end of the year. We will complete our execution at the end of the year. This shows us the 9.8%, which is 9% of the group. This is our value generation area for the investors. To give you an update on the program of our repurchasing shares, we repurchased 2,000,272,000 shares at an average price of COP 21,000, an investment of COP 48 million. We have a calculation about the assembly we gave by the assembly. This would be the end of the presentation of the group's financial statements. And I'll give the floor to Carlos Ignacio for the outlook and for the Q&A.

Thank you, Jose Domingo. Now vis-a-vis the outlook and starting with the commercial part, we foresee for the fourth quarter of this year, a positive dynamics and although we will be facing the logistics problems, we mentioned, which we might have some out of stock products to finish inputs. And in some -- the U.S. and Chile, we have some pressures related to labor availability. These challenges, we mentioned that with the capabilities of Grupo Nutresa, but that also is a challenge, but it's also an opportunity because not all the actors have the same challenges in the same way and for us, at the same time, we create new opportunities for exports and for supplying with our group capabilities, our new opportunities in the market. Thanks to the strength of our brands, to the development of channels and diversification of categories, geographies and our capabilities to supply our value offering. We have good outlook for the next quarter. We ended October. It's a very good business month. With respect to cost and expenses, we will be facing these challenges, as we mentioned, of commodities and surpluses in surcharges and logistics, but with the implementation of our efficiency in productivity strategies where we are going to be active in the last quarter of the year, and we're going to be active also during the next year. We are projecting returns higher than the cost of capital. So this is an outlook for the business in terms -- we'll see significant growth with challenges but with sufficient leverage to continue with very good growth. And pressure on profits, but with a combination of productivity and with our pricing strategy that we would say that it's there, but we use it very -- in a very focused manner to meet our markets. We see that we are going to have very good results. This is the outlook for us to share with all our shareholders. And Catherine, let's open the Q&A session.

Thank you, Carlos Ignacio. We'll start then to the Q&A session. Let's start with 2 questions that came in through the web chat. Francisco, the results were very good. Can you clarify whether in some segment, there are nonrecurring effects? That is the first question. And the first question by Francisco is what are the commodities that were more impacted by hedges? And what can we expect in terms of cost for the fourth quarter?

Well, thank you, Francisco for being with us and let me answer your questions. First, about the nonrecurring -- extra costs, you know that in Biscuits, we've said that before in this conference. We've been implementing some projects. Grupo Nutresa has been building SC 3 category plant. And that we're already finishing. We're about to start working on the plant. And that is seen in the assets, but it's not generating any sales yet. And you should know that the company flow has been able to continue with this project. We're about to put this plant into operation. Grupo Nutresa in its state of results for the period reported also as [indiscernible] the donation of the cocoa fund, which is something that has one time, and I think that is not going to be repeated. I wouldn't say that these are nonrecurrent or expensive to the people care because pandemic continues, although the cost and expenses associated with people protection are lower than the previous years. But I think that we will continue to have some part of those expenses, they will continue, but at a lower level than previously because of circumstances fortunately, for everybody, have improved. In terms of rates and costs, I think, are high, but honestly, I think that next year, they're going to continue very similar. The accumulated results for the September 1 show some extra costs in logistics to meet our acted demands. When those protests made some Colombian areas become isolated, we hope that, that will not be recurring. That is, as I mentioned, we have good business results and financial results, which have these peculiarities, but there's nothing additional that is worth mentioning. As far as the commodities, this is a kind of ongoing activity. We are -- we have a team dedicated to managing commodities, 20% and for the rest of the year, we have some very good coverage levels. And I think that our average is very high in terms of coverage. So it's going to have some impacts, but we don't expect it to be very significant during the rest of the year. In terms of currencies, the debt in dollars exposure is practically nil. Our debt in dollars has matched with income in dollars. For next year, the outlook is somewhat more challenging, but we have had coverage but when you know that commodities reach higher levels, we cannot set the figure eyed for the entire year. So we're monitoring in actions throughout the year. I think that perhaps the exposure for cocoa because it’s a cocoa production country where we have physical inventories all the time. We have -- the previous years, we helped with cattle both in beef, where we have more than 35,000 head and in pork, we have one in 20,000 pork. We have some degree of coverage, but we're working on it. For the rest of the year, Francisco, we have a very highly covered with our impact for this year. For next year, lower coverage, but with initiatives going on, it’s not only in financial and brands and in the vertical integrations that act as hedges or protection. I'd like to say that it's normal to have some sort of exposure. It's a lot to do with competitors' abilities and how we can work with pricing and there are no -- 100% coverage. When we have ever that too high, it's a disadvantage. That is the answer. And I think that there's a work front that we've done pretty well compared to our competitors, and we still have room for pricing. We see that this is taking the part by the competitors, not only in Colombia, but also in all the other geographies. Thank you, Francisco.

Thank you, Carlos Ignacio. We have a question from [ Juliana Garcia ].

How much room do you have to contain expenses and compensate the high prices of commodities?

Thank you, Juliana. Thank you for the question. I think that we emphasized more the idea of expense discipline, and we believe in that disciplined concept. [Technical Difficulty] We have the challenge of recovering, and I'd like to say that the -- we don't look at this and EBITDA. We don't look the ROI by EBITDA. What we believe is that we can have some impact, but we will continue with these good dynamics. Commercial activities are very good, and we believe that we're good in sales. Care that we had to for people over the last previous year, people taking care of their health and lives have created some levels of commitment and motivation for the business, we have more -- we're selling more than products we're selling experiences with that good basis and they're human with brands. Although we have lost some stimuli, we will continue to have good results. I'm not going to say it's 25, no. No, but we're going to continue to have good results with the challenges that we mentioned. Thank you, Juliana, for being with us and for your question.

Another question from Felipe Ucros from Scotiabank.

Carlos, Jose Domingo, a couple of questions about the new business that you mentioned and encouraging export from Colombia to overseas. Can you tell us a little bit about the structure of the contract that you have with them? Are you doing a joint venture or is that more of a distribution contract like some modelers about margin vis-a-vis the ROI effects because that type of contract have a very low margin, but almost 0 capital investment. So they have very good results in the ROI. What is the contract structure? What should we expect? And perhaps the most important thing is to think whether you want to continue this -- the distribution channels that you have, is a very important competitive advantage? And I think that when companies like -- international companies can go to markets where you are already present, this distribution structure is very good. The ones that you haven’t seen, for example, is -- this is part of our bigger project of trying to bring more brands into Colombia?

Thank you, Felipe, for being with us and for the questions. It's very well focused. I'd like to speak first about this company. The company we created, which is Basic Kitchen has several purposes. Distribution in Colombia is one of the objectives, but it is not the only one. In fact, we at Grupo Nutresa, this is a portfolio, which we call a culinary portfolio. We've been working on that through several channels and we've had project from Naturela, some through Novaventa. We have -- markets would initiate with some presence in -- and we have sauce -- spices and sauces in some of our plants. The culinary segment is of interest, and we want to strengthen it. And this can be done through M&A or through alliances like we're promoting with BADIA. So what we asked -- this is a family company, a Spanish company founded in 1967, with a presence in more than 70 countries with very high-quality products, and it's a large company. What we want to do initially, as you said, is where the investment is moderate investment vis-a-vis the size of the opportunity. And what we have is an 80-20 company, that 20% is an entrepreneur who had a distribution initially. We had very major capabilities and we have an exit formula too. And the challenges that we are going to become because of the powerful in a market, we can multiply many times those sales, and we can reach some channels, which have not reached Colombia yet. For example, the traditional channels and to more than 4.5 million homes to Novaventa, we can make this brand achieve some leadership positions. This also poses some EBITDA margins, which are -- you included that in the equation, which are not very high. But due to a low investment in the use of some assets and capabilities that Nutresa has, vis-a-vis – has very high returns, more than twice the ROI than the average for the group. What do we want to do with this? A very successful experience that we can -- if we do, okay, we can replicate that -- with in other geographies or with other allies. That is the story of what we're doing with BADIA. We're just beginning. I think that this last quarter is going to be the take-off of a very interesting company together with this organization.

Can you comment a little bit about the exports from Colombian exports?

Yes. This -- I'm sorry that I almost forgot to answer that second question. Last year, when we're at the most difficult time of the pandemic, the Board of Directors of Grupo Nutresa, invited us to look for opportunities to develop the countries where we could have a Grupo Nutresa would share some capabilities without releasing secrets or formula but how sharing with others, we could create value for others. And that's why we had -- from that challenge posed by the Board of Directors. This is an organization, I'd say. It's also at the end of the mission of internationalization that the Colombian government proposed. And what we are proposing is an ecosystem where we connect companies with exporting potential. They are willing to do their homework and those who come to us. And the first thing you have to do is they have to go for a screening where we detect what they need to be able to become international. And after they close those gaps, those gaps will not be required by the Grupo Nutresa. Grupo Nutresa isn't going [to be looking for] any help, but they have a network of allies, universities for Colombia consultants [indiscernible] international allies, a company that close the gaps and they can set up or they can start writing on the distribution wagon of Nutresa. We do care to avoid conflicts of interest and we have that interest in new training as a commercializing company, where we have a commercialization margin, and it gives -- similar to what we do with Basic Kitchen, we have the usual installed capacity. We have a long-term dream, and we hope -- and I'm going to -- we know our dates. If we were able to set up 100 companies and have them export USD 110 million apiece, that would be USD 1 billion additional exports which would be wonderful for the countries where we operate and which would create some significant results for the company because this is a development activity, but it is also a philanthropic activity. Of course, it's a business but based on creating ecosystems and building capacities, it's, of course, [ size ] about the initiative. We are about to -- completing the paperwork, so that the company can act. We hope to start working -- acting as an international commercial organization as a [ CI ] with the advantages that -- that's why we'll take you -- we changed the name to CI Nutrading. Thank you for the question. Do you have any more audio questions?

We have no further questions. I have a virtual question by [indiscernible] I'd like to understand better the behavior of the sales prices that have increased higher than the volumes. How sensitive are consumers to price increases? Can you give us the strategy of repricing and the changes?

I'll be very glad to answer the question. You were saying that there is a scenario, which is challenging in commodities and international logistics. We in some conferences before, these -- we've given more information about the pricing strategy. Basically, it -- depends on strategic models where we have the ability to stimulate different scenarios of consumer behaviors by reference by channel and by geography. So basically, what we do here is to simulate what would happen if a reference in the specific channel and geography in different scenarios of reactions of the competitors in markets with free competition. And they can react differently. Obviously, I was mentioning the word of accessibility, and we are interested on the one hand, to give our shareholders the profit levels that they should have. I would say that in the long term, even in the short term, while we have some ups and downs and improvements or decreases. But we must not lose mind or the sight of the fact that the consumer purchasing power -- food is more than in other sectors of the economy. When you see inflation in the region, if you look at Colombia, Chile, the U.S. itself, perhaps lower scale in Central America in every country, there is an inflation increase. And inflation in many of the economies have described that a tax on the poor, it is not only how are we going to do this vis-a-vis the competitors, but also how are we going to do this vis-a-vis the consumers' purchasing power. When I was mentioning that we still have room, it means that at the end of the third quarter, in Colombia, for example, because I give you an example, one of the businesses has not increased the prices. All the business have increased prices somewhat. And those increases have been between 1.5% and 9.4%. Why they are very different, because the price demand occurs by channel and by priority is different. If I do an international assets, the international assets will show that the average prices might have gone up by about 4%, but it is not the same in all geographies. So the behaviors of prices in response to the traditional analysis we do reference by reference, channel by channel and geography by geography. So right now, we have -- how the competitors react also because not all of them have such a sound coverage strategy because not all of them are supplied locally. And what we'll see during the last quarter and next year is a series of small [indiscernible] adjustments, which will be higher for the brand strength and the particular conditions that we have enabled us to take higher positions. And especially lately, the price increases that we've made have taken place with recovering volume. What does this mean? It means that some competitors have more vulnerable positions than ours. We've been doing this every day. We're doing this very professionally, very careful not -- all are being very careful. We shouldn't lead to very high increases. So this gives us an idea of how we do this, how we've done it so far during this year. And outside of Colombia to also and what's in-store for the future but this is totally dynamic. And we've been able to rate the prices also. But we've also been able to decrease them if the conditions that put the pressure on the price disappear. So we try to maintain profit levels, adequate recurrence on capital, but we also have we want to be accessible. The strategy of Grupo Nutresa always said has become part of people's lives. It's solving their needs and meeting their expectations. Part of that is becoming -- or being accessible is being available, and that's what we developed channels for but part of that is being accessible. And in fact, we've shared part of the achievements in productivity and part of it, we've shared that with the market and that gives us the power for these brands. We expect to continue doing so.

Thank you, Carlos Ignacio. We have one last question from Daniel Guardiola, which -- who has asked I'd like to understand how sustainable is the expense level that we saw during the quarter?

Well, I mentioned that earlier, but I'll give you a new emphasis. Expense control is a discipline. We decreased 24% by focusing our expenses to different markets and different channels where we had the need to do it. We show also that we're going to -- it's very difficult to continue the same, but we'll continue with the same productivities structures or plans that gives us the ratio of sales prices of sales cost -- and we have been working on this for the last couple of years, and we want to keep this discipline. Historically, we've had seasonal expenses during the quarter and that -- there's nothing to make it disappear. So I think that, as you said, we continue to be applying our productivity plans, but also given the seasonality, we always had because the fourth quarter traditionally is where we close all the provisions at completed projects from the year. The expenses are more heavily loaded during this last quarter.

Thank you Carlos Ignacio. Thank you very much. This will be the -- since we have no more questions, we will conclude the conference results for the third quarter 2021. Any additional questions, you can send it to me through the Investors Relations directory. Thank you all for being with us and have a have a good day. Thank you for your participation in this event. You can now hang up. [Statements in English on this transcript were spoken by an interpreter present on the live call.]