InRetail Perú Corp. (INRETC1) Earnings Call Transcript & Summary

Good morning, and welcome to InRetail Peru's Third Quarter 2021 Conference Call. [Operator Instructions] And please note that this call is being recorded. After the presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. It is now my pleasure to turn the call over to Rafael Borja of InspIR Group. Sir, please begin.

Thank you, and hello, everyone. And welcome to InRetail Peru's third quarter 2021 earnings conference call. Before we begin, I would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. Joining us today from InRetail Peru are Mr. Juan Carlos Vallejo, Chief Executive Officer; and Mr. Gonzalo Rosell, Chief Financial Officer. They will be discussing the quarterly report distributed by the company yesterday. If you have no -- you receive a copy of the earnings report, please visit www.inretail.pe on the Investors section where there is also a webcast presentation to accompany discussion during this call. If you need any assistance, please contact the Investor Relations team of InRetail Peru. Please be advised that forward-looking statements may be made during this conference call and they do not account for economic circumstances, industry conditions, the company's performance or financial results. As such, these forward-looking statements are based in several assumptions and factors that could change causing actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report, which was issued yesterday. At this point, I would like to turn the call over to Mr. Juan Carlos Vallejo, Chief Executive Officer of InRetail Peru, for his opening remarks. Juan Carlos, Please go ahead.

Thank you, Rafael. Good morning, everyone, and [Foreign Language]. Thank you for joining InRetail's third quarter earnings call. Today, we will discuss the main highlights of InRetail third quarter results. I will begin with a brief introduction on current market condition, and then Gonzalo will walk you through our earnings presentation. InRetail posted another good quarter with double-digit growth in revenues and EBITDA, due to a strong growth in our Food Retail segment, incorporating macro, a solid growth in our Pharma segment and a strong recovery in our Shopping Malls segment. Our Food Retail segment managed to maintain a strong double-digit top line growth of 35.2% and a strong EBITDA growth of 32.2%, with a solid same-store sales growth of 9.1% despite the challenging comparison basis of last year, positively impacted by an increase in both food and non-food categories across all formats. Our Pharma segment, on the other hand, posted a high single-digit growth in revenues and EBITDA due to a high single-digit growth in revenues in both our pharmacies and distribution units and a double-digit growth in EBITDA in our distribution unit that continued to reactivate distribution lines, which were closed in the context of the pandemic. Finally, our Shopping Malls segment reported another strong quarter, the best since Q4 2019, showing a consistent recovery from the pandemic with a 53.5% growth in revenues and a strong 68.8% growth in EBITDA versus Q3 2020, maintaining a high occupancy rate of 93%. Despite the political uncertainty Peru is going through, given the healthy trends that we are observing in our 3 segments still today, we remain optimistic on our ability to continue growing and improving our performance metrics. With this, again that we have been outperforming our forecast through the year, we feel comfortable that InRetail will exceed the guidance we gave at the beginning of the year of about 15% growth in revenues and EBITDA. Growing revenues is slightly more than 20% full year 2021 and EBITDA at around 20%. Our consolidated business model, the continued development of our omnichannel strategy and the resilience of our business segments give us confidence to continue investing in developing our pipeline in the Food, Retail and Pharma segments, which should allow us to continue supporting healthy growth trends over the next few years. Finally, I'm happy to share with you that last week InRetail Peru was included in 2 relevant sustainability index. One of them is the S&P Dow Jones Sustainability Index for MILA Pacific Alliance. And the other one is the new S&P Dow Jones Sustainability Index for the Peruvian Stock Exchange. These recognitions are a result of our commitment to sustainability and ESG across the board, having incorporated sustainability among our key strategic pillars at the core of our strategic planning. With that, let me pass the word to Gonzalo. And as always, we look forward to answering your questions by the end of this call.

Thank you, Juan Carlos. Good morning, everyone. Thanks for joining us on this call. Once again, before starting, I would like to briefly remind you that the numbers we will be discussing today are presented under IFRS 16 and are fully comparable to numbers reported in our financial statements since 2019. Moreover, I would also like to remind you that our 2020 results did not incorporate Makro's results in our P&L since it was acquired on December 23, 2020, towards the very end of the year. We have started to incorporate Makro's numbers as of 2021. Now please turn to Page 4 in our earnings presentation to start reviewing our highlights and consolidated financial results of the third quarter for InRetail Peru. In the third quarter of the year, InRetail reported a double-digit growth in revenues due to a strong growth in our Food Retail segment incorporating Makro, a solid growth in our Pharma segment and a strong recovery in our Shopping Malls segment. Revenues reached PEN 4.5 billion, a 21.6% increase versus the third quarter of last year, and gross margin stood at 28.2% in the quarter, showing a slight reduction in comparison to the previous year, mainly due to incorporation of Makro's cash and carry stores that operate with a lower gross margin. In terms of adjusted EBITDA, we recorded a double-digit growth in comparison to the same period of last year, reaching PEN 589 million and an EBITDA margin of 13.1%, registering a slight margin expansion due to a strong recovery of our Shopping Malls segment. Finally, our net income this quarter was mainly impacted by onetime expenses related to FX losses and the restructuring of FX derivatives, which was partially offset by a strong performance in our 3 segments. For reference, the PEN-U.S. dollar exchange rate closed at 4.136 at the end of September 2021 compared to 3.866 at the end of June 2021 and 3.599 at the end of September 2020. Currently, the exchange rate is at levels of around 4, however, still registering high levels of volatility. In terms of guidance for InRetail, as Juan Carlos mentioned, given the strong quarters we have been reporting despite the uncertain political context we are going through, we feel comfortable that InRetail will exceed the guidance we gave at the beginning of the year of above 15% growth in revenues and EBITDA and will grow revenues at slightly more than 20% full year 2021 and EBITDA at around 20%. Please turn to Page 5 to review our consolidated net income results. InRetail registered a gain of PEN 62 million in the third quarter of 2021 compared to a gain of PEN 122 million in the same period of 2020, mainly explained by an additional EBITDA contribution of PEN 108 million in the third quarter due to the incorporation of Makro and a strong performance in our 3 segments, but which was negatively impacted by a higher net FX loss, which includes the IFRS 16 effect on our lease liabilities and by higher financial expenses due to a non-cash expense of PEN 39 million related to a restructuring of FX derivatives. Excluding FX mark-to-market and one-time effects in the quarter, net of tax effect, net income for the third quarter would have reached PEN 166 million, increasing 20.7% versus the comparable quarter of the previous year. Now please turn to Page 6. This quarter, we continue with our efforts to evaluate different available hedging strategies in the context of an increased fluctuation in our local currency. On September 15, we replaced $300 million of coal spreads for $300 million of Range Principal-Only Swaps for InRetail Consumer's $600 million bonds. In addition, we remain with $300 million in call spreads in the range of PEN 3.70 to PEN 4.20. The strike price of the new Range Principal-Only Swaps is PEN 4.1063 and will apply when the exchange rate is within the range of PEN 3.70 and PEN 6. Above PEN 6, we are exposed marginally and below PEN 3.70, we benefit marginally. Finally, the swap cost is, on average, 2.1%, protects principal, excluding interest payments and will be in place until maturity of the bonds. Later on in the presentation, when I mentioned our current exposure to the U.S. dollar, I would briefly summarize the FX derivatives that we currently have after the latest changes. Now please turn to Page 7 to review our financial and operational snapshot of our consolidated figures. In terms of contribution, considering last 12 months as of September 2021, our Food Retail segment accounted for 51% of consolidated revenues and 36% of consolidated adjusted EBITDA with an adjusted EBITDA margin of 9.3%. Our Pharma segment accounted for 47% of consolidated revenues and 51% of consolidated adjusted EBITDA with an adjusted EBITDA margin of 14.3%. Finally, our Shopping Malls segment accounted for 3% of consolidated revenues and 12% of consolidated adjusted EBITDA with a net rental income margin of 76.5%. We will now continue with our results by segment. Please turn to Page 9 to start with our third quarter highlights for our Food Retail segment. Our Food Retail segment recorded, once again, a strong quarter despite a high comparison basis last year when we also registered a double-digit growth due to the increase in demand in the context of pandemic. Revenues increased 35.2% this quarter, which includes the incorporation of Makro's 16 cash and carry stores, one new Plaza Vea store inaugurated at the end of last year, 98 net Mass stores incorporated since Q3 2020 and a solid same-store sales growth of 9.1%, which was positively impacted by an increase in both food and non-food categories. During this quarter, we opened 30 Mass stores and closed 8 and reopened one of our Plaza Vea, one of our top Plaza Vea stores in Lima, which had been closed since January of this year to be fully renovated, expanding sales area by approximately 1,000 square meters as well as increasing its parking space. Our gross margin decreased 191 basis points this third quarter, mainly due to increased weight of a cash and carry format, which operates at lower margins, but which was mostly compensated with improved fixed cost dilution, registering an EBITDA margin of 10% in the quarter. Overall, we continue strengthening our multi-format strategy with positive trends across formats. During the third quarter, our flagship format Plaza Vea represented 63% of sales. Our high-end supermarket format, Vivanda represented 3% of sales. Our hard discount format Mass represented 8% of sales, and our cash and carry format Makro represented 26% of sales. This remains in line with the revenues contribution we saw last quarter. In terms of e-commerce sales, this quarter, we continue to experience an important demand for food and non-food categories versus pre-pandemic levels. Our e-commerce penetration stands at levels of around 7% when we consider only sales from Plaza Vea and Vivanda, which are the formats that have an e-commerce platform. In terms of synergies related to the acquisition of Makro, as I commented last quarter, we are well advanced in the execution of the different synergies and this will have a full year effect in 2022. Finally, for Food Retail, we feel comfortable that we will exceed the guidance given for the year, which considered a higher than 25% growth in revenues and 20% growth in adjusted EBITDA, and we'll probably experience a revenues growth of about 30% and an EBITDA growth of around 25% for full year 2021. Now please turn to Page 10 to review our third quarter highlights for our Pharma segment. Our pharmacies unit registered a top line growth of 6.8% in this third quarter with a same-store sales growth of 4.3%, which was positively impacted by a positive growth in both pharma and non-pharma categories. During the quarter, we opened 18 pharmacies and closed 5. Our gross margin reached 35.5% this quarter, in line with the previous quarter and above the comparable quarter of last year. In terms of adjusted EBITDA, we recorded an adjusted EBITDA margin of 16.8% above the comparable quarter of last year, mainly due to a higher gross margin. Finally, in terms of e-commerce in our pharmacies unit, we also continued experiencing a strong demand versus pre-pandemic levels. Our e-commerce penetration, which includes sales from our app, e-commerce and call center stands at levels of around 4%. Now moving on to our distribution unit. This quarter, we reported a revenues increase of 6.8%, mainly due to continued demand from pharmacy chains and independent pharmacies and the reactivation of consumer lines. Gross margin was 12.9% in the third quarter, above the comparable quarter of last year due to an improvement in client mix in comparison to the previous year, while certain channels were closed. Finally, in our distribution unit, adjusted EBITDA margin reached 4.6% in the quarter, above 2020 levels due to a higher fixed cost dilution. All in all, at a consolidated level, our Pharma segment revenues registered an increase of 7.4% in comparison to the third quarter of last year with an adjusted EBITDA growth of 6.9% and a consolidated adjusted EBITDA margin of 14.1%. Finally, in terms of guidance for InRetail pharma at a consolidated level, we expect to register a slightly above 10% growth in revenues and adjusted EBITDA for full year 2021, above the mid single-digit growth that we had initially guided. Now please turn to Page 11 to review our third quarter highlights for our Shopping Malls segment. In the third quarter, our Shopping Malls revenues reached PEN 141 million, registering a 53.5% growth versus the comparable quarter of last year and registering continuous improvement quarter after quarter. During the quarter, we finished the expansion of Real Plaza Cusco and cinemas reopened within our malls ending the quarter with 89% of GLA and maintaining a high occupancy rate of 93%. Since November 14, all our malls, except Sullana, are allowed to operate at 80% of maximum visitor capacity, above the previous levels of 50% and will continue to remain open until 10:00 PM. Only education tenants are still not allowed to open. In terms of adjusted EBITDA, we registered PEN 82 million in the quarter and net rental margin of 78.1%. In terms of mark-to-market, we registered a gain of PEN 23 million in this quarter compared to a loss of PEN 3 million in the comparable quarter of last year. In terms of liquidity, as of September 30, our Shopping Malls segment had PEN 205 million in cash and equivalents and an investment of PEN 189 million InRetail shares. Finally, in terms of guidance for InRetail Shopping Malls, we continue to expect revenues and EBITDA to grow between 35% and 45% in full year, in line with what we said at the beginning of the year. Now please turn to Page 12. This slide sums up our food retail sales area, number of pharmacies and shopping malls as well as our same-store sales by quarter. In the Food Retail segment, in the third quarter of 2021, we opened 30 new Mass stores and closed 8. With this, we closed the quarter with 109 supermarkets, 516 Mass stores, 21 cash and carry stores and 483,000 square meters of total sales area. In the fourth quarter, we expect to open 2 new Makro stores in Lima and approximately 50 new Mass stores. However, as part of the fine-tuning of our high discount format model, we'll be closing approximately 40 Mass stores by the end of the year, the last group of undersized stores with physical limitations for sales growth. In our pharmacies unit, we opened 18 stores and closed 5 stores, opening 13 net pharmacies in the quarter. With this, we ended the quarter with a total footprint of 2,211 pharmacies. By year-end, we expect to reach our target of opening 100 new stores in the year. In the Shopping Malls segment, we added 21,000 square meters of GLA due to the expansion of Real Plaza Cusco ending the quarter with 834,000 square meters of GLA. In terms of same-store sales, we can observe the solid high single-digit same-store sales growth recorded in our Food Retail segment this quarter, considering the very high comparison basis in 2020. In our pharmacies unit, same-store sales in the third quarter slowed down in comparison to the first half of this year since it compares to a higher second half in 2020 with high single-digit same-store sales when food traffic had recovered after the strict lockdowns in the country at the beginning of pandemic. Finally, our Shopping Malls tenants have also strongly recovered, recording same-store sales of 32.6% in the third quarter, which only considers tenants, which were allowed to operate their physical stores in both comparable periods. If we compare same-store sales of third quarter 2021 versus the third quarter of 2019, we're recording significant growth of around 20%, explained by a strong comparable growth in anchor tenants and a continued recovery of other midsized and small tenants. Now please turn to Page 14 to discuss our CapEx and cash flow generation. During the third quarter of 2021, we invested PEN 165 million in CapEx for 3 business segments, mainly for the construction and remodeling of stores for Food Retail and Pharma. In terms of cash balance, we ended the third quarter with PEN 963 million of cash, above the end of year cash balance of PEN 936 million, having incorporated the operation of Makro, performed the associated liability management post-acquisition in the first quarter of the year and distributed annual dividends of $70 million in May of this year. Please turn to Page 15 to discuss our consolidated financial debt. As of September 2021, InRetail had a consolidated net debt of PEN 6,893 million with a net debt to adjusted EBITDA ratio of 3.1x, slightly above the previous quarter. This leverage ratio considers 3 quarters of Makro's operation. In terms of composition of our debt by currency as of September 2021, 49% of our debt is in Soles, 48% has been hedged and only 3% of our debt is exposed directly to the dollar. As I commented at the beginning of the call, in the last few months, we have executed FX derivative restructurings with the objective of increasing the range of our coverage we had in the context of local currency appreciation and volatility. As a brief recap, we currently have in place for our InRetail consumer bonds, call spreads that protect us from exchange rate depreciation between $370 million to $420 million for $300 million until maturity of the bonds. Additionally, for InRetail Consumer, we have a Range Principal-Only Swap with an average strike price of $0.04 to $0.63 with a range within the range of EUR370 million and EUR6 million for a notional of $300 million until maturity of the bonds. For InRetail Shopping Mall bonds, we have a call spread structure for a notional amount of $250 million that protects us from exchange rate depreciation between PEN 3.26 million to PEN 3.75 million and a $100 million full cross-currency swap at a strike price of PEN 3.887 at a swap rate of 8.75%. Now please turn to Page 16 to review our debt by segment. [Foreign Language], our Food Retail segment ended the third quarter with a net debt of PEN 2,602 million, which includes intercompany loan with InRetail Consumer-related to the acquisition of Makro. Net debt-to-EBITDA remained at 3.2x. On the other hand, InRetail pharma ended the third quarter with a net debt of PEN 2,192 million with a net debt-to-EBITDA ratio of 1.9x, slightly above the previous quarter due to additional dividend distributions, which will be used for InRetail's extraordinary dividend to be distributed at the end of November. Finally, InRetail Shopping Malls ended the third quarter with a net debt of PEN 1,992 million with a net debt-to-EBITDA ratio of 6.7x, showing further reduction versus the previous quarter, mainly explained by the improvement in the LTM EBITDA, and as we continue to increase GLA under operation and tenant sales strongly recover. We expect to continue deleveraging during the year and going forward. This covers our presentation. And now we will be glad to answer any questions you may have.

[Operator Instructions] Our first question is from Nicolas Larrain with JPMorgan.

Gonzalo, I wanted to understand or if I could hear your comments on how should we see your expansion base this in drug store signing, Mass stores or Food Retail as a whole [indiscernible] Peru and what you just mentioned in terms of openings in 2020. So how should we see the opening space for -- especially for drugstores and the Mass and Makro going forward in the coming years?

As we have commented through the presentation, we are seeing pretty positive trends for all our formats. And with that, we feel comfortable about the future prospects of our business segments in general. And therefore, we intend to continue deploying our pipeline through the end of this year and over the next few years with the information we have today. Having said that, and without getting to specifics yet about guidance for 2022, given that we are still in the process of finalizing the budgets for each business segment, over the next year, we should continue opening big box stores in the smaller stores of our mass format in pharma as well. I would say that in general terms, assuming an yearly expansion of around 120 new pharmacies for 2022, around 120 Mass -- new Mass stores for the year as well and about 2 big boxes of the Plaza Vea format and 2 new big boxes of cash and carry format should be a reasonable assumption. Again, we'll give us every year more detailed guidance when we report Q4 numbers. But with the trends we're seeing and with how comfortable are we with the resilience of our business segments, numbers should be around that [ bolder ].

Our next question is from Joaquin Ley with Itau.

Could you please share with us how was the performance of your food retailing legacy business? I mean, if we exclude the consolidation of Makro operation in terms of same-store sales and in terms of margin, please?

We have been seeing positive trends across the board in our Food Retail segment -- in all categories and all formats. Evidently, our new cash and carry acquisition has performed better than the rest of the formats, given that 2020 was a particular year in which [indiscernible] and the professional clients were dramatically affected by the pandemic and lockdowns and so on. But having said that, the legacy format like Plaza Vea have experienced a high single-digit same-store sales in the third quarter. Mass has grown as well with positive same-store sales. And the cash-and-carry format experienced a strong double-digit same-store sales, which in the end, contributed to the high single-digit same-store sale number for Food Retail as a whole. But what we're seeing is positive trends from our legacy format as well. And so far, from what we have seen through October, we shouldn't have any surprises, hopefully, through the fourth quarter either.

So it would seem, right, at least relative to what your closest competitors have reported in the third quarter that if we only look at your legacy business, you continue to gain market share at a very fast pace, right? So why do you think that is?

I believe that it's a combination of factors, but it's the discipline that we have put behind the operational efficiencies that allow us to be disciplined as well in our pricing strategy that continues to attract traffic to our stores. And I believe it's a virtue cycle of scale, operational efficiencies that allow us to sustain a discipline everyday low price strategy in our different formats. I didn't mention margins that you also asked about. In our different formats, margins have kept pretty stable as well. We haven't seen margin erosion. We have seen a reduction in gross margins versus the previous year, given the incremental weight of cash-and-carry in the sales mix within our Food Retail segment. But aside from that, we haven't experienced any gross margin erosion in general terms.

Our next question comes from Marco Contreras with KALLPA Securities.

I actually have 2 questions. The first one is regarding the specific drivers of the performance of same-store sales in Food Retail. How much can we relate this with the higher inflation in food products or maybe the higher exchange rate impact in non-food products? And then, my second question was, if you could share what would be the impact in the company's margins of a potential increase in the minimum wage? It would be great if you could elaborate on this.

Thanks for the questions, Marco. I would say that related to the answer I gave to the previous question from Joaquin, the drivers of same-store sales in our Food Retail segment, in particular, have more to do with the value proposition and the commercial strategy focused on heavy low prices than with cost inflation. You have seen the reports from some of our competitors last week, and they have experienced lower same-store sales metrics. And they are facing the same cost inflation pressures as we do. So in general terms, I would say, it's more related to the good value proposition and price positioning of all our different formats, in our multi-format strategy. With regard to the minimum wage, there's still no minimum wage increase approval from government. The impact, if we assume a minimum wage increase starting in April next year, would be about PEN 18.5 million for InRetail as a whole. Full year effect would be around PEN 25 million. Of that, about PEN 18 million for a 12-month period would come from our Food Retail segment. About PEN 5 million would come for full year for our pharma segment and around PEN 2 million for our Shopping Malls segment. Again, so far, government has only announced a subsidy for 3 months. So there's no confirmation yet about minimum wage increases formally.

[Operator Instructions] Our next question is from Alonso Aramburu with BTG.

Gonzalo, can you comment a little bit on potential new formats in pharmacies? You guys were developing the new format -- beauty format in the past? Maybe some color on that. And just to confirm the guidance of the new stores for March in the fourth quarter, was that a 50, and that's a net number or that's a gross number? And I believe you said you were going to close also 40 stores. And I'm not sure if that's for the year or for the quarter.

Answering first the second question, we mentioned that we are going to open around 50 new stores in the fourth quarter. And indeed, we're going to close about 40 stores in the quarter as well. The last bunch of small stores that we opened at the beginning of the development of a format that had less than 150 square meters in general, no stores that have limited ability to scale up and increase sales and dilute operating expenses. So it's part of a fine-tuning of a model we're going through. After that, we feel that we're going to get back to the more disciplined core hard discount model that is allowing us to experience already an acceleration in top line by having a slightly more aggressive pricing strategy for that format as well. For next year, we expect to open -- not subject to the formal guidance that we're going to give earlier next year, probably around 120 new stores. And we're going to probably close very few stores next year, given that we have gone through that process already during 2021. And with regard to potential new formats in pharma, we have been going through a process of fine-tuning the profile of our footprint already through 2020 and 2021 with already remodeled several of bigger Mifarma stores that were located in more upscale areas to the drugstore model. Mifarma Beauty, probably for next year, we'll end up having around 300 -- about 2,200 stores that we operate today. We have other format that is called [ Apollo ] that we operate under the Inkafarma brand that is approval format where we have put pallets at the entrance of those stores, selling personal care products like diapers and other similar categories that are allowing us to increase sales per store. We're going to have next year about 350 of the [ Apollo ] format. And then, we also have the Inkafarma Express format, but we're only going to have about 50 of those stores next year. So, I mean, the short answer is, we have already been going through the process of fine-tuning the profile of our footprint in the Inkafarma and Mifarma chains. That shouldn't have a dramatic impact on the sales mix or profitability of all our chains is going to simply continue contributing to ways to accelerate in top line and slightly improving gross and EBITDA margin throughout the next few years. And that's basically what we're already doing for the last couple of years.

Our next question comes from Josseline Jenssen with Lucror Analytics.

What [indiscernible] about leverage and with the leverage that you expect by CRM, do you expect that InRetail Pharma will reduce its leverage after the dividend payment?

InRetail Pharma, in particular, is probably going to close this year with a slightly higher leverage ratio than the one we have reported for this third quarter explained by the extraordinary dividend that is going to be paid out at the end of this month. Having said that, we expect deleveraging to start since the beginning of next year and go through 2022. As you know, the Pharma business is a capex light, asset-light business model with very strong margins and generates a lot of liquidity. And 2021 has been an exceptional year in the sense of having approved an extraordinary dividend, something that is not necessarily likely to happen next year. Next year, we're going to resume the ordinary dividend distribution that is going to be discussed and approved in the General Shareholders Meeting at the end of March and paid out in May. The amount is to be defined yet, but it's not going to be necessarily as high as the full year dividend distribution of 2021. And therefore, we should expect deleveraging foreign retail and its 3 different segments through 2022.

Could you say it like in consolidated terms, we have seen InRetail Consumer considering that [indiscernible] guidance for Food Retail. Then if we see it in consolidated terms, at least a slight increase in net leverage for Pharma will be offset by lower leverage from Food Retail?

For this year, Consumer -- InRetail Consumer, which consolidates the Food, Retail and Pharma segments should remain at similar leverage levels as the ones reported for this third quarter. Again, having said that, through 2022, Consumer will experience deleveraging as well through next year for the good performance of different -- the 2 different formats.

My last question is regarding the dividend. On Pharma, you said that it will be like be in regular terms for next year, could you remind us how much it would be or it's like 50% less? I think it was like distributed this year [ and do you ] have an idea of that?

It's a tough question. Josseline, honestly we haven't had a discussion internally yet. But I mean, this year, 2021, we distributed $70 million as ordinary dividend in May and we are distributing another $70 million at the end of this month. So it's going to be $140 million. Next year, I mean, assuming that we're going to propose and probably is going to be approved, something higher than the $70 million, I feel very comfortable saying that, but it's probably going to be below the $140 million. So somewhere in between 70 and $140 million.

That concludes the question-and-answer portion of today's call. I would like to turn the call back over to Mr. Vallejo for closing remarks.

Thank you all for participating in our third quarter earnings call. As a final remark, I just wanted to highlight that although the political context remain challenging, we have closed another strong quarter, which led us to improve our guidance for the year from the 15% growth in revenues and EBITDA to more than 20% growth in revenue and around 20% growth in EBITDA. Considering the nature of our business segments, we remain confident on our ability to continue growing and improving our performance metrics as well as continue developing modern retail in Peru. With this, we finalize our third quarter earnings call. If you have any follow-up questions, please do not hesitate to contact any of us. Thank you very much.

Ladies and gentlemen, this concludes InRetail Peru's third quarter 2021 earnings conference call. We would like to thank you again for your participation. You may now disconnect.