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

Good morning, and thanks for joining us during this presentation of the results of the third quarter of 2022 of Grupo Nutresa. Today, I'm joined by Carlos Ignacio Gallego, President of Grupo Nutresa; José Domingo Penagos, VP of Corporate Finance; and Diana Bernal, Director of Corporate Finance. My name is Catherine Chacón, Director of Investor Relations. [Operator Instructions] To begin the presentation, let's give the floor to Carlos Ignacio Gallego, President of Grupo Nutresa.

Thank you, Catherine. Good morning. Thank you for joining us. To begin, I'd like to invite you to look at Slide 2, in which we like to share with you several highlights of this period. Firstly, I'd like to tell you that Grupo Nutresa was distinguished as the third company with the best reputation in Colombia, according to MERCO Empresas y Lderes Empresariales 2022 and ranks first within the food sector. For this ranking, we see different values, for instance, corporate FX and social responsibility, talent, international dimension, innovation, economic and financial results and quality of the trade offer. This recognition really drives us to keep working towards our goals based on integrity, good corporate governance, collaborative management and respect. So this is a great opportunity, I'd say to remember the philosophy of Grupo Nutresa, which can be summed up in 10 items. Autonomy with strategic coherence, good corporate governance, responsible corporate citizenship, the productivity and competitiveness, development of talent, integrity, respect, collaborative management and that the food is reliable and lead to healthy life. On the right-hand side of this slide. Secondly, I'd like to share with you that Grupo Nutresa adhere to the principles to empower women. We're indeed involved with the respect of all people. So that's why we promote with diverse working and inclusive working, which really has to do with sustainable development. So we adhere to these principles to empower women because we think it's very important to have actively women in the companies. We commit to women and men and to enhance female leadership, diversity in roles to eliminate trades and everything has to do with the inclusiveness in the chain value. And really, the idea is to develop equitably society. After reporting these 2 topics of interest, I'd like to move on, please, to Slide #3 in which will see sales of the third quarter of 2022. As you can see, the growth of the third quarter in Colombia and overseas reflects the trade dynamics of our portfolio. When it comes to occasional earnings, we grew 29.8% in sales, increasing to COP 2.6 billion. We'd like to highlight coffee, crackers and pasta and others. All of the businesses of the group have grown double digit. When it comes to volumes, these grew 6.3% with positive variations in every business unit. As to average prices, we still adjust gradually. Always being careful of the accessibility of our products in the market. If we look per business when it comes to cold cuts, this grew 21.2% with stable volumes and our presence growing in different channels. When it comes to crackers, it has -- it really highlights commercially growing double-digit in every channel and with a growth of 43.6% with volumes increasing 10.3%. Chocolates grew 25.8% in sales and 8.4% of volume, with a good balance in its main categories, highlighting the segment of confectionery. Coffee, which really shows the biggest growth of the quarter with 58% in sales and volumes in 10.7%. All the categories and channels of coffee have also grown double-digit. When it comes to Consumer Food, this grew 14.3%, showing a sustained growth in presence, presential and allied channels. When it comes to Ice Cream, these grew 23.4% with good dynamics in all channels. In Pasta, the growth is 37.6% with the volume increased 6.5% and good trade dynamics throughout the portfolio. When it comes to Others, we grew 26.1% with a good performance and growth and double-digit in food service and those distributed by third parties. When it comes to sales overseas, income in dollars is USD 429.2 million, growing 26.3%. In COP, sales are COP 1.8 billion, up 43.9%. During the period, we saw a devaluation of 14% of the COP compared to the USD compared to the same quarter of the year before. Total exports from Colombia during the quarter were COP 129.3 million, which is a very good source of growth. In this international front in the quarter per business in Tresmontes Lucchetti,we grew 14.5% in dollars. And in its functional currency it was 37.4% with a sound dynamics in its channels and geographies and good growth in the main categories with cold beverages, pasta and snacks. In Crackers, we reported an increase of sales of 27.3% with the recovery of the commercial recovery in the States and Central America. Coffee grew 61.6% as a result of more exports from Colombia and a positive development in the operations we have in the States. In Chocolates, we grew 16.3% with good performance in geographies like Mexico, Peru and the U.S. The international operation of Consumer Foods grew 16%, which is quite good since we reported a high growth during the same period of 2021. Cold cuts decreased 19.4% in dollars, mainly because of the lower exports made by Colombia and lower sales in Panama. When it comes to Others, grew -- we grew 7.9%. Now moving on to Slide 4. We have -- we can see that by combining the increased sales in Colombia 29.8% and overseas 43.9%, we report total sales during the period of COP 4.5 billion, up 35.3%. As you can see, this is a great quarter commercially. All of our business units and the chapter of others report growth of double-digit. And when it comes to the accumulated figures, let's move on, please, to Slide #5, in which you can see that along with the results of the quarter -- the accumulated results of sales are quite sustained with price adjustments and positive volumes. In Colombia, we reported sales for COP 7.3 billion, up 31.5% with a positive performance in every business unit. Volumes grew 10.4% and average prices increased 19.9%. The above is really the result of gradual price adjustments and changes in sales mixes. All business units have double-digit growth in the period in which Coffee -- which are led by Coffee and Chocolates. In terms of volume, every business unit shows positive variations. International sales or overseas revenue in dollars were [ $1.1 million ], up 22.9%. And in COP, these sales are COP 4.8 billion, up 35.5%. The organic growth was 20.6% in dollars. Total exports from Colombia during the period or accumulated is $236.9 million, up 4.5%. With the exception of Cold Cuts that I mentioned, all of the business units show good results in international sales. So moving on to Slide 6, up 32.1%. All of our business units and others showed double-digit growth. So this year, I have an accumulated that has very positive sales. I'd like to take advantage to tell you that for MEGA 2030, we wanted to double our company without hurting our capital cost. This is MEGA -- really went through the growth of 7.2% growth per year. The first year, we grew 14.5%. And this year, you can see that so far, we've increased way, way beyond that with 33.1%. In the past teleconference, I remember I told you that our projections, we won't aspire to grow below 7.2%. If we project after the end of this quarter, and based on what we grew with 14 last year, Grupo Nutresa will double, not in 10 years, but in 6. And I believe it's very important for you to know that the aspirations and goals are dreams, objectives, but not roads. So we feel very challenged, very proud and we think that the company has capabilities to keep having a great performance commercially. If we want to see then how these sales are doing per region, I invite you to move on to Slide 7. Here, you can see that sales outside of Colombia represents 39.8% of total. This geographic diversification is very important. Even more now with the volatility with the devaluations that many countries in Latin America have, especially in Colombia, the most growth is in the U.S., Mexico, Peru and Central America. So as I said, Colombia is first in sales with 60.2%, followed by the U.S. with 13.3%. Third is Mexico -- Central America was 9.8% and Chile with 6%. This strategy of internationalizing it and geographically diversifying the company is what Grupo Nutresa designed for its strategy and we work hard to strengthen this every day. So the contribution of Colombia is important, yes, but the contribution of overseas is important as well. And now talking about profitability. We'd like to share with you that in Slide 8, you can see that during the -- this quarter of the year, raw materials are quite volatile and up trending, especially with the communities of Grupo Nutresa are way above what we saw last year due to a higher price of reference and the raw materials that we use for a reduction. However, it is important to highlight that compared to the previous quarter, there is a drop of 6% in the index so we can continue working with efficient -- efficiencies and hedges in the organization. We've told you in every teleconference that we manage risks and the volatility of currencies and raw materials. So that's why we have a combination of operations of futures of hedges -- physical hedges also when convenient, and later when we talk about the cash flow, we have devoted a good portion of it for physical hedges when there are opportunities in market capitals. To deepen on the aspects related to our profitability, now let's listen to José Domingo Penagos, VP of Corporate Finance. Welcome, José Domingo.

Thank you. Good morning to everyone. As usual, as of now, we will talk about the profitability. Looking at the EBITDA, the depth -- the accumulated and, of course, the financial statements, both periods, the intermediate and accumulated. Let's begin with Slide 9, in which we can see the EBITDA of the third quarter. Let's look at some figures. They met COP 531 billion with sales margin of 11.7%, but up almost 24% compared to the period -- previous period. And after the figures, let's look at some concepts. And it's really key to understand and analyze the results of the profitability. To look at the effect of global inflation and how it hurts each geography where we operate. And to talk about inflation, it may sound very general, but the first impact of inflation is the increase of raw materials, which you have seen all year, we have seen increases of 30%, 40%. The figures are bigger than the simple inflations, which are at 10%. So -- and we are -- there are cases of almost 100% that I'll share with you ahead. So first let's look at the increase of inflation, and this leads to higher cost of raw materials. Also remember, 65% of our raw materials are dollar indexed. So where we operate everybody has been very pressured and pushed. Remember, we have certain natural coverage because of the revenue and expenses of the group but when it comes to cost of commodity and rates, we do have a challenge. And that challenge has to do with our responsibility to manage prices so that with the power -- purchasing power lost by the consumer, they will stop buying our products. So that's the first reaction to the pressure term costs. The adjustment of prices that Carlos Ignacio told you that we're trying to control responsibly. The second effect, and we'll see it ahead in the figures is our discipline in expenses. What does this mean? We have better management or we adapt better to circumstances through certain costs or expenses, but that doesn't mean we'll stop investing or will do so. This is the time to keep the brand alive, updated, and we'll do that. However, we manage different cases and we equalize that equation differently. And lastly, with productivity, the [ inefficiency ] in the group. And this is an installed capacity that we have for moments of higher volatility like -- like the ones we have in emerging markets, we -- it's common to see volatility. So these 3 elements that will be displayed in our figures explain the equation of the profitability and the results of each business unit in some cases, with certain angles, but generally, that's what explained it. So with that said, per business, I would like to look at the accumulated figures in an income statement. In Cold cuts, you can see the margin is 12.3%. But what is more relevant is the growth of 24% growth of EBITDA and this can be a common denominator in all business units except Coffee and Consumer Food. What's key here is that the commercial dynamics of the quarter gives good results to the business unit of Cold cuts and to manage the growth, for instance, of raw materials in this period. In Crackers, we have a good backlog of the EBITDA, especially the growth, remember, a revenue of 44%, and this is shown here with [indiscernible] that grows above 100%. we have pressures with wheat and packaging material, yes. But I'd like to say that the turnover of our revenues and sales allow us to manage very well profitability. Remember, Cold cuts is more local and has less natural coverage, but Crackers is much more diversified. It has great performance and different platforms, especially in the States, Mexico and Central America. And it's really more positive to look at this EBITDA with a margin very close to 14% -- 13.9%. In Chocolate, beyond the figures, which are great with the 14.1%. This business unit has been one of the most stable, if you could say that in an emerging market, but it has more soundness when it comes to profitability. Cocoa has shown good windows for coverage. This has been a good commodity and those results have been good. And commercially, there's been a good mix of sales for more profitable categories. This has been well captured by this business unit throughout the year. And this quarter really reflects that event with regards to profitability. When it comes to Coffee, evidently, you can see how the EBITDA is 5.8%. And we've seen how the commercial performance was good in local platforms and international platforms. But now that I was talking to you about inflation, here we have a commodity that grew 100% during the period. So you have to understand that the challenge here is to manage with productivity and efficiency, managing well prices, but this is a very important category for the group in this moment -- specific moment and we want to apply more productivity efficiency here to reach a better profitability. But this category should be taken care of and we have to manage this commodity rise of 100% with being more serene and having a healthy brand. But as one look at the, again, this is a business unit that's very diversified. So it collects the impacts of the growth of every raw material the wheat, the coffee, packaging materials. But that same diversification allows to have a good balance with a margin of 11.8%, as you can see, but a growth of 26% of its EBITDA. I have -- I think it does have a good mix. In Chile and Mexico, remember, here, we collect information from those two geographies. And in Mexico, we have a better performance. Chile is doing well with good dynamics, but Mexico is really improving, and we're emphasizing the control of expenses and it shows the good accumulated results that we'll see ahead. Consumer Foods, we have an EBITDA margin of 20.1% with the effects of increased cost of raw materials, but especially the control of expenses and costs. Although it's more related to cash flow and returns, we have to highlight here the good management of fixed assets in this period. We see that there are 15 more stores. So there is a good yield of transactions. But it's not really because of the locals. See, we have 832 points of sale. And the focus, yes, is to grow. But by managing those points of sales. When I talk about 832, it's Mexico, it's really Central America, Colombia and other countries. So we're handling best the cost and expenses of this business. As I said before, I've talked about the quarter and accumulated because, frankly, structurally, they're practically the same in terms of EBITDA and income statement or P&G. Here, we see Ice cream, great commercial dynamics, good management of brands -- of the concepts. Really, it's a business unit that has also been well managed, managing its fixed assets. And with the freezers, we're doing very well with EBITDA margin of 15% with a good cash flow conversion because of how it invoices. Pasta, the next business unit with a margin of 9%, increasing 2.2%. And it's important to highlight here the weight also -- like in Coffee of the raw material or Commodity price over the total cost of this business unit. In Pasta, the raw material is 83% of its cost structure. So any movement or deviation has an impact on its results in this quarter, it has a big effect, but we will see that accumulated this business unit has great performance. And lastly, others, it has a margin of 7%. Here, we have [indiscernible] business, which has made a full cycle with the first year, it goes according to the business plan, good performance in revenue and profitability, it's been managing well everything has to do with raw materials, for pets. It's got a good price structure and it really goes hand-in-hand with the business plan with an EBITDA of [ 30% ]. This has to do with distribution of third parties. Others really shows good EBITDA. So this explains really this line of the income statement, which shows the accumulated. If you look at Slide 10, Here, you can see that the effects that I've talked about show the magnitude of an EBITDA of COP 1.5 billion up 25.8%. So you can see on the Slide 10, the figures in detail and excluding coffee, all business units have grown with double-digit in this case for the accumulated of the third quarter. Moving on to the financial statements. You can see the Slide 11, you can see the accumulated [indiscernible] [ 33% ], the growth of profit -- net profit is 31%, accumulated at 35%. The structure is frankly the same. So let's look at the quarter and accumulated quicker. So as I said before, the growth of revenue, 35% COP 4.5 billion was invoiced in this period. And according to what we said before, the cost is the main challenge. So I'd like to explain here the revenue and cost. But look, the cost -- increasing 45% over 35%. Specifically, where do we have an impact on cost reduction of 430 basis points of gross margin, which we manage through price discipline and costs. Let's look at expenses. All of this has to do with administration production grew 17.6%. You can see sales '24 production, 4.9%. But remember, revenue grew 20%. So we have here an impact of costs which means 380 basis points of savings. It's really 380 basis points, and that reaction will even be better for the growth of cost. This is fundamental to understand the equation and how the group has adapted to the circumstances of these costs. Difference of exchanges, operational, operating or not. This is what we've tapped out in previous events, the result of managing coverages and our hedges. And operating and nonoperating revenue. And we have an operating profit up COP 415 billion, up 18% and an EBITDA that we mentioned of COP 530 billion, growing almost 24%. And the bottom, what we can see is that we have financial revenue by managing the cash flow and this has been especially to leverage growth. And here -- but what's most relevant here is expenses. During this period, the financial expense grew 95%, meaning COP 55 billion more of financial expenses in the period. But let me tell you, this is really the result of the growth of revenue and what we're doing financially is to support that commercial management, which turns out to be the best way to manage resources of the group because of the returns it shows. So indeed, we have more financial expenses. The interest rate is of 9.3%. It's still below inflation. But of course, especially in the countries where we operate, -- but of course, it's above that of the year before. It's lower than inflation because of the coverage we have of the fixed entrants that we had and long term. But it's also worth highlighting that we don't have an exposed debt in dollars. The participation in associates and joint businesses show revenues of almost COP 7 billion. And the growth of taxes because of the profitabilities that we have from different operations, but really what's most relevant, we are with a rate at 32% compared to 29% the same period the year before. And I would like to say that the effect of the rate that we will end the year with will be at 29%, 30% of the effective rate for the entire group. So we have a profit, net profit of COP 220 billion, up 21% compared to the same quarter of the year before. As I mentioned before, the effects and structure of the accumulated is very similar to what we've seen for the rest of the quarter. So revenue is 33% higher than the year before. As I said, the impact on the cost is 420 basis points, but the way we are managing this with discipline of expenses, thus gives us big savings. So this shows the effects of an operating earning of COP 20.1 billion, meaning 32%. When it comes to the middle line, we can see that when it comes to exchange differences, there are revenues as a result of the hedges and financial expenses, it's the same effect. The effect of the income accumulated is 28%. And I told you before that we could end the year at 29%, 30%. And all of the set of attributes mentioned show accumulated net profit of COP 326 billion with a margin over sales of 6%. So that's the explanation on the middle line of the income statement of the quarter. On Slide 13, which ends the section shows debt. And I'd like to give you a context of a debt that moves from COP 2.5 billion to COP 3.2 million. Indeed, we took more debt, especially for treasury, mainly to leverage that growth that we mentioned. We took some from the cash flow and treasury to invest in that growth of the group, which shows returns of 11.3%, which validates the thesis that the best way to allocate capital for the organization is investing it in these operations with great returns. Also, those COP 3.2 billion are [ 1.9 ] of the debt and EBITDA. So you can see it's the same indicator really in the past 3 years. And here -- has to do -- this has to do with the message of orders of magnitude. If we take more debt, it's under conditions that are proper for the group, but mainly to finance a new scale, a new order of magnitude of the group. So we have a bit more of debt with revenues of the organization. This implies having the same debt level, and we deem that this is healthy. So the debt ends with that 9.2% of the cost that I mentioned before, with the mean life of 4.2 -- .3 years and the accumulated CapEx is [ 3,200 ]. But I would say that we would end with COP 400,000 billion for the end of the year. So with these comments, let's give the floor again to Carlos Ignacio, who will share with us the prospectus for the end of the year. And then we'll move on to the Q&A session. Carlos Ignacio?

Thank you, José Domingo. Moving on to our perspectives for the incoming years -- months, especially for the last quarter. We foresee -- that the volumes -- and I would like to say, overall, in most categories of this first part, in these first 3 quarters of the year, we have improved our market share in most of the categories and we believe that there could be some lateration in volumes. And also we expect good growth -- sales growth overseas. You already saw that in the third quarter, we grew more than our overseas than in Colombia. And I think that's for the last quarter, it will be similar. So we foresee of last quarter with good commercial dynamics and that it will gain importance when it comes to profitability. We project a gradual moderation of the price of several commodities. We began to see that this is happening with some and this, of course, will allow us to moderate several impacts and to handle our hedges. And also we'll be managing the volatility and the devaluation of peso to dollar. And I'd like to anticipate that when you look at this topic, there are risks, yes, but we think that it's also an opportunity because it increases revenue and allows us to gain competitiveness to face markets outside where we operate. These circumstances gradual moderation of the commodity prices and more devaluation volatility along with the efforts that we will continue making to improve the productivity of costs and expenses and to continue applying our pricing strategies without hurting accessibility will, allow us to end the year with good returns. So we see this positively. Again, you can say that companies like Nutresa have capabilities that allow them to go through those turbulent times and still have good results. So that's our outlook. And now Catherine, let's begin the Q&A session.

Thank you, Carlos Ignacio. So let's begin the Q&A session. The first question that we received through the chat of the webcast is [indiscernible] from Valores Bancolombia.

Why wasn't it possible to keep margins in the Coffee business? Is there -- was there something that happened with the pass-through? And how do you see the profitability of this segment in the future?

Well, [ Juan Camilo ], first of all, thank you for joining us today and for your questions. I would like to try to explain this specifically. The Coffee business is one in which the raw material weighs the most in terms of the cost and its structure. I would say that it's 80% of total cost. Second, as José Domingo said before, if you look at the last year, the increase of the raw material is up 100%. Third, we are managing a business -- this business on a long-term basis. If we would transfer that 100% immediately to the consumer, frankly, especially in Latin America, we would lose many consumers that we have to buy substitute products. So what we've done is that we shared part of the result of the hedges that we've had with the consumer and price increases have been below to what the raw material cost increased. But it's basically because we're taking care of the market on a long-term basis. Besides the raw material price in Colombia, you are aware that coffee as well as the grapes for wine. With coffee, there are also different varieties, especially in Colombia. There's been some scarcity of several coffee varieties, which to meet the market and not have a shortage. We've had to use other more expensive coffee varieties. Of course, this is a temporary substitution. So what can I say? The coffee commodity has been showing some corrections before, it was at 230. Now it's 190, 200. So there's some improvement. We've been making hedge operations. And I think gradually, we will see a recovery. And we will reach much better levels than what we have. So -- it's a situation of not transferring the entire impact to the consumer, to protect the category on a long-term basis. In addition, you -- many of you may be aware, but the coffee business, which has been growing so much at Grupo Nutresa, the sales of this business are bigger overseas than in Colombia. And this is a huge opportunity for us in the future. We have the know-how. We have very powerful brands and a market that's very large in the States, in B2B and directly arriving to the consumer. So we think it's powerful that's in a low cycle because the impact of the prices of raw materials. But with the portfolio, there are other businesses doing well. They have allowed us to surpass this time. So this is my answer Juan Camilo.

Next question is Julian Chacon from Davivienda Corredores, she asks, what expectation do you have for next year in terms of volumes and profitabilities? On the other hand, the increase of the short-term debt is for what?

Thank you, Julian, for your question and for joining us. Let me answer the first question. The second, regarding the debt will be answered by José Domingo. Firstly, traditionally, we do not provide detailed guidance. When I talked about the accumulated, I said that we will grow at least 7.2% from here on. But also, we don't want to grow less than inflation. So that gives you 2 signs that can serve -- to have an idea, we don't want to grow in any country where we operate less than the inflation and less than 7.2%. That's with regards to revenue. And second, I've said that we're looking for returns above the capital cost. I cannot give you more guidance from hereafter, but I can say that depending of what happens with the rates and the devaluation, I think that the internationalization strategy in a setting with more devaluations, it's very important for a company like Grupo Nutresa. We have major plans, innovation is key, still the new plant we opened is exporting. We don't -- look, I haven't said anything about Venezuela, like as a market of opportunity, it could have some reaction. So there are good sources of growth. We see with good hope next year, not with panic or fear, we really think we have good capabilities to face that year. Thank you for your question, José Domingo?

Julian, the increase of the short-term debt is something that we did in the group to finance -- the growth. Because if you look at the magnitude, mainly the growth is in capital growth -- working capital specifically in inventories. For us, inventories have strategic capabilities to guarantee supplies and hedges. So we have used that short-term debt to finance the growth of working capital within the organization. And I'd like to remind you, we keep the same indicator -- but basically, it's to finance the growth of the organization regarding work capital.

The next question is Felipe Ucros from Scotiabank.

Thank you for the presentation and congratulations for the results. I'd like to ask, have you seen any down-trading in Ice cream, Chocolate or Consumer Foods? I ask this because other companies in the sector have started to see this in this quarter.

Felipe, good morning. Thank you for joining us for your comments and your questions. With regards to Ice cream and Chocolates, we haven't felt any down-trading. Instead, we have noticed a big demand, great opportunities in both business units and improvements, not only in sales but also in profitability. So there, we see them stronger. With regards to Consumer Foods, we've carefully been managing, taking care of the returns and also taking care of the sales. And I'd say that growth isn't as high as that of ice cream and chocolate, but we keep growing. Remember this here in Colombia in Ice cream -- no, in Consumer Foods, we're facing a change, and it's because of the taxes, which shows results that are more moderate. Remember, we didn't have the VAT and now we do. So the category is shown well in this report, although it's absorbing the hit with the VAT, which during the pandemic, was suspended in Colombia. So we see it okay, yes. But I'd say that the precaution -- the caution is that we do see that more inflation will hit the pockets of consumers. And as you've said, there could be some down-trending because the consumer will look at its financial position and start to think about buying priority categories. With regards to Ice cream and Chocolate, there's been a wind in our favor. During the pandemic, please remember several mom-and-pop stores, close to colleges and schools were closed. And in a setting like today where the market is entirely open, there are opportunities to have these 2 driven categories that you don't plan to buy -- what we see is there is a setting in which there are purchases and people decide to buy them. And we have very strong brands, so we have a good demand in Chocolate and Ice cream. And I would say that we are okay in Consumer Food, but we have to look at it, knowing that it's absorbing the impact of -- because of the taxes because an aid that we had before, we don't have it anymore.

Next question is from [indiscernible] and this has to do with the proposal of the tax reform in Colombia.

I'd like to ask, how do you see the impact of the tax reform in the processed food sector?

Thank you for joining us today. Let me answer your question. Firstly, the reform is still under discussion. Practically, every day, there's new news regarding this reform. And I think that your question is more focused on what's being talked about with regards to taxes and food. Frankly, what we see is that everything that has to do with tax in food will be transferred to consumers. So I think that, that's why the government is very careful with this because in an inflation -- inflationary settings, very high taxes will represent increased prices, significant ones. But remember, with the proposal that we have today on the table, not all categories of Grupo Nutresa will be impacted, some won't have that tax. But that list -- the products and then positions and of codes is quite dynamic. If you ask the last valuation, how much was it? It was COP 240 billion. But frankly, what they said is that everything will become price. And surely, that leads to another question. So what will happen to volumes? What we see is that it will be a price for all market players, not only for Grupo Nutresa. So in this case, an important aspect is, again, to remember that 40% of our sales in Grupo Nutresa are overseas. So that tax reform for food will hit us. It will only hit a portion of the remaining 60%, and it will be more price and it will hit the consumer. And there we will do our very best efforts to develop our channels, brands and also are -- so our products will be hit the least possible. So that answers your questions regarding taxes on food.

Next question, [indiscernible] from Grupo Bancolombia.

The government reactivated relations with Venezuela, and you have Cold cuts in Venezuela. So what can you tell us about the reactivation of exports? How do you see the development of this potential market?

Thank you, [indiscernible], for joining us and for your question. We've been asked that question a lot recently because in the media, it's been said that we will return to Venezuela, but we haven't left Venezuela. We've had a lot of flexibility and reduced the size according to the possibilities of operation in Venezuela. We have a Cold cuts operation in Venezuela small today. It's a small portion of our installed capacity there. And with regards to exports, we will be exporting dry products that do not require refrigeration. We will be making exports directly without running risks of account receivable. Grupo Nutresa is not interested in creating a lot of risk there. So while we can continue assuring the exchange terms, we will increase our exports, yes. Of course, there's a huge area in Colombia that borders that Venezuela that has been displaying high sales. So I think that there is an opportunity. We do not foresee in the short term basis, large exports to Venezuela. We have a team there. We are -- we know that how we can work there. So while payments are made, we will be working there. There's something that we have to work closely with the Ministry of Trade, Industry and Tourism in which the new minister is an expert in Venezuela. We worked with them in the past. And the idea is to have a trade relation that will have proper risk levels within the figures that we've shared with you, we do not place high expectations. I mean we do not think that Grupo Nutresa's results will depend on this. This is something that we will be managing risks properly.

Perfect Carlos Ignacio. For now, we don't have any more questions through the chat of the webcast. To everyone, thank you so much for joining us. And this ends our teleconference of the results of the third quarter 2022. If you have any more questions, please contact us through Investor Relations. Thank you so much for joining us. Have a good week.