Genomma Lab Internacional SAB de CV

BMV:LABB

Earnings Call Analysis

Robust Q3 for Genomma Amid Expansion

In the third quarter of 2023, Genomma Lab International demonstrated robust financial health, with a top line adjusted growth of 16.9% and an EBITDA margin increase to 21.2%. Major markets exhibited growth in the high-teens range, and key brands like Analgesic, Suerox, Tio Nacho, and Novamil exhibited significant growth, with Suerox and Tio Nacho expanding market share notably across regions. Noteworthy is a push for productivity with a targeted MXN 1.8 billion by 2027. The dual strategy is focused on bolstering core brands to generate an extra MXN 1 billion in sales and streamlining operations to enhance focus and free up working capital. With strong market performance, an optimistic outlook for reversing negative trends in certain brands, and impressive quarters for Suerox, Tio Nacho, Groomen, as well as consistent gains in Cough & Cold and Infant Nutrition categories, Genomma is navigating challenges effectively to propel further growth.

Robust Growth and Resilience Amid Currency Fluctuations

Genomma's Q3 2023 started on a high note with top-line growth impressively reaching 16.9% year over year, when adjusted for currency comparability and excluding Argentina. The story here is one of resilience and strength, as the company managed growth despite the Mexican peso appreciating and Argentina's substantial 38% devaluation. Even with these economic headwinds, growth in Mexican pesos was a solid 9.1%. The company also managed to inch up its EBITDA margin to 21.2%, improving by 20 basis points from the previous year, and even reduced its cash conversion cycle by 4 days, enhancing liquidity and efficiency.

Strategic Innovation Drives Category Growth

Amidst these earnings, Genomma highlighted powerful category performances which stemmed from targeted innovation and strategic product launches. Particularly in Mexico, growth reached 16.3%, which the company attributes to their potent innovation strategies. It's clear that Genomma's focus on meeting evolving consumer needs with products like the anti-gray hair version, resonating well with its target audience, is paying dividends. Meanwhile, robust year-on-year growth figures such as 36.5% for Suerox and 34.5% for Tio Nacho were fueled by geographical expansion and new product sizes, respectively, demonstrating a robust and dynamic product lineup.

Solid Performance from Key Brands and Categories

Beyond just individual products, Genomma has shown a commendable ability to grow entire categories. For example, the Groomen brand charted a year-on-year growth of 36.4%, and Analgesics and Cough & Cold categories both experienced double-digit growth. Their success in capturing market share, like the Analgesics' growth by 11% year on year, is evidence of strategically positioned brands and effective marketing. Importantly, the Infant Nutrition category, led by the Novamil brand, saw an astonishing 71% year-on-year growth, securing a stronger foothold in the market.

Progress in Productivity and Savings Initiatives

Productivity and efficient cost management are areas where Genomma has demonstrated particular astuteness. With a goal set in February of achieving MXN 1.8 billion in productivity savings by 2027, a significant milestone of MXN 268 million has already been secured. Moreover, manufacturing capacity expansion by commissioning a new Suerox line and refining logistics for customer shipments underscore the company's commitment to continuous improvement and competitive cost structures.

Financial Metrics and Regional Breakdown

Investors would be particularly interested in the financial metrics where net sales hit MXN 4.4 billion for the quarter—up 1% year-on-year. The EBITDA margin increase of 2.3% to 21.3% tells a story of growing profitability driven by successful productivity projects. And although facing currency headwinds, it's significant to note that this quarter marks Genomma's 20th consecutive quarter of top-line and EBITDA growth, signaling consistent performance. Interestingly, sales growth was particularly strong in Mexico, reaching MXN 2.1 billion, a 16% year-on-year increase, powered by sales of key products like Suerox, XL-3, Tio Nacho, and Tukol.

Leverage Concerns Amidst Growth

A notable concern for investors would be the increased net debt to EBITDA ratio, which ticked up to 2.7x from 2.5x. Although an uptick in leverage metrics can raise eyebrows, it's essential to understand it in the context of the company's overall robust EBITDA performance and strategic investment in growth initiatives.

Earnings Call Transcript 2023-Q3

[Operator]

Greetings, ladies and gentlemen. Thank you for joining Genomma Lab's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this meeting is being recorded and will be available for replay from the Investor Relations section of Genomma's website following the call. I'll now turn the call over to Barbara Cano of the Inspire Group. Please go ahead.

[Unknown Executive]

Welcome, everyone. On today's call are Marco Sparvieri, Chief Executive Officer; and Antonio Zamora, Chief Financial Officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements, such as the company's financial guidance and expectations, including long-term objectives and forecast as well as expectations regarding enormous business assets, products, strategies, demand and markets.

These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today, and the company undertakes no obligation to update them as a result of new information or future events. Let me now turn the call over to Marco Sparvieri.

[Marco Sparvieri, executive]

Thank you, Daniel. Good morning, everybody. In Q3 2023, Genomma exhibited a strong performance. Our year-on-year top line growth reached 16.9% when adjusted for like-for-like currency and excluding Argentina, translated into Mexican pesos. This represents a growth of 1%. This change was influenced by the Mexican peso appreciation and a substantial 38% devaluation in Argentina. Excluding the economic challenges in Argentina, which despite their complexity, our team has adeptly managed, top line growth in Mexican pesos stood at 9.1%.

Additionally, our EBITDA margin rose to 21.2%, marking an increase of 20 basis points year-on-year. Notably, our cash conversion cycle also improved shortening by minus 4 days compared to the previous year. Our major markets flourished with 76% of the business outpacing local inflation rates. Specifically, growth rates were; Mexico at plus 16.3% behind a strong execution of the innovation, point-of-sale execution and TV communication plan; the U.S. at plus 14.4%; Brazil at plus 12.5%; Argentina at plus 55% and Colombia at plus 18%.

Emphasizing our core brands continues to bear fruit with 61% of the business, increasing their market share in respective categories. Standout performance included Analgesic at plus 11%, Suerox at plus 36.5%, Tio Nacho at plus 34.5% and Novamil infant nutrition at plus 71%. Cicatricure is on a slowing decline trend at plus/minus 1%. However, Asepxia faces headwinds with a dip of minus 14%. Our push for optimal productivity is on track. We are targeting MXN 1.8 billion by 2027.

In Q3 alone, the San Cayetano plant realized COGS savings of MXN 7.2 million, amassing a total of MXN 21.6 million for the year so far. We also wrapped up the design and rollout of a novel logistics program aimed at refining transportation costs, which is set to yield an additional MXN 45 million in annual savings.

In summary, Q3 2023 painted a picture of robust financial health, consistent growth in pivotal markets and tangible strides in our productivity endeavors. Our strategy ahead is clear, amplify our core brand strength and navigate the skin care sector's challenge to propel further growth. I would like to revisit our dual focus strategy. As we discussed back in February, we have outlined 2 main objectives for the forthcoming years. Firstly, our aim is to concentrate on our flagship brands with the goal of achieving an additional MXN 1 billion in sales.

Concurrently, we'll be offloading or parting with brands that aren't central to our mission. By adopting this approach, we anticipate sharpening our managerial and operational focus as well as liberating working capital. Secondly, our emphasis is on productivity. We are embarking on a plan set to yield MXN 1.8 billion through specific productivity initiatives. This endeavor has been pinpointed and our dedicated team is actively working on bringing them to fruition.

Let's pivot to a discussion about our portfolio's performance. Referring to the chart, it's evident that a majority of our primary brands have posted remarkable outcomes, especially when we view it in a like-for-like currency terms, Argentina excluded. Our strategy of directing resources and emphasis on these primary brands is indeed paying dividends. Additionally, it is encouraging to note that Cicatricure is beginning to curb its downturn.

With the rollout of recent innovations already introduced in the market, I am optimistic that we'll see this negative trend reverse by the next quarter. However, Asepxia still requires our attention and efforts. Turning our attention to the market's performance. The news is encouraging. The chart illustrates that all our main markets have reported robust sales for Q3. It is worth emphasizing that each of our leading countries, Mexico, the U.S., Brazil and Argentina are experiencing growth in the high-teens percentage range.

In Central America, the issue is primarily with selling. Our sellout on the other hand, boost a healthy double-digit growth. Nonetheless, Chile continues to pose challenges. We are thrilled to report that Suerox had another exceptional quarter with a year-on-year growth of 36.5%. Results are driven by the market expansion to Peru, Chile, Argentina, Central America, the U.S. and Brazil. All markets are performing in line or ahead of expectations.

Chile, in particular, is performing exceptionally well with shares up 6.7 points versus a year ago. This chart shows the exceptional performance that Suerox is showing in Chile, only 1.5 years after the launch. As you can see, the red line of Suerox is rapidly approaching Powerade and Gatorade. Tio Nacho experienced a strong year-on-year growth of 34.5%, growing market share in all markets. The brand's growth can be attributed to the successful launch of anti-canas or anti-gray and the introduction of the 950 ml size. Mexico, Brazil and Colombia executed the strongest performance growing 31%, 55% and 63%, respectively.

Let's take a closer look at the chart on the screen, which showcases the success of our anti-gray haircare version. As you can see, this variant has become one of our top sellers for the brand, rapidly gaining popularity among our customers. The anti-gray hair version has resonated exceptionally well with our target audience, and its performance is a testament to the strength of the product offering and our ability to meet consumer demands effectively.

Now let's turn our attention to another achievement, the significant success of our 950 ml size variant. As depicted in the chart, the 950 ml size has experienced outstanding sales growth, becoming a standout performer to our brand. This larger size has struck a cord with our consumers, providing them with added value and convenience, leading to its rapid adoption in the market. Its success is a testament to our ability to identify and cater to our customers' preference effectively.

Groomen achieved a robust year-on-year growth of 36.4%. Both markets, Mexico and Chile delivered positive share growth results. In Chile, the brand grew 1.8 points and in Mexico, 1.2 points in the quarter. In Mexico, share growth is driven by the introduction of the disposables and cartridges SKUs at Walmart. The Analgesics category experienced strong growth of plus 11% year-on-year. Our results are buoyed by a notable performance across key brands and markets.

X-ray in the Andean region stands out with a significant growth of plus 58% comparing to last year, capturing 7% market share year-to-date in Colombia. These strengths are our stance as the third leading brand in the market. In Mexico, Alliviax has registered an 18.7% increase. Meanwhile, in Argentina, Tafirol growth of 22% in local currency is tempered by the slowdown of Paracetamol 500 due to its 2022 Omicron baseline. Despite these challenges, we successfully held our market share steady at 37.3%. Let's take a closer look at the chart, which vividly illustrates the phenomenal growth of X-ray in Colombia. In just a few years, X-ray has achieved a remarkable progress, consolidating its position as the #3 player in the category. It's worth noting that assure a while ago, X-ray barely existed in this market. This achievement reflects our brand's strong performance, effective strategies and the strong acceptance of X-ray by Colombian consumers.

We are proud of the team's dedication to the brand, rapid ascent to a prominent position in the market. The Cough & Cold category witnessed a year-on-year growth of 11.1%. Our growth consistently outpaces the market, registering an increase of plus 1 percentage point in share of market year-to-date. This momentum is spread headed by gains in Argentina, plus 3.3 points year-to-date and Mexico, plus 1.5 points. With this trajectory, we are poised for our most robust season yet in 2023, 2024.

The Infant Nutrition category continued its strong performance, achieving a year-on-year growth of plus 71%. Our premier brand, Novamil, has seen strong growth across all its core variants, each securing a greater market share in their respective segments. We are delighted to highlight substantial strides in our productivity initiatives. Having set a goal in February 2023, of MXN 1.8 billion in productivity savings by 2027, we have already secured MXN 268 million in annual savings as of now.

Let me now get into the specific productivity projects that add up to the MXN 268 million in the chart I just showed. Our San Cayetano plant is progressing as expected, delivering COGS savings year-to-date. So far, the plant has achieved total savings of MXN 21.6 million, with MXN 6.2 million achieved in Q1, an additional MXN 8.2 million in Q2 and MXN 7.2 million in Q3.

Moving forward, we remain committed to maintaining the highest standards of quality and efficiency at the San Cayetano plant. We will continue to implement measures to ensure smooth operations and substantial cost savings. Over the last 3 quarters, our team has undertaken a sophisticated project to refine the logistics cost related to customer shipments. This encompass growth optimization, the establishment of stringent purchase order guidelines to streamline transportation costs, enhance truckload mixing among other improvements. With this program now in action, we anticipate an annual saving of MXN 45 million.

As a reminder from our last call, I am free to share that during Q2, we achieved a significant milestone with the successful commissioning of a new Suerox line. This expansion has bolstered our manufacturing capacity by an additional 96 million bottles per year. Not only has the new Suerox line increased our production capacity, but it has also played a pivotal role in our cost optimization efforts. The expansion has led to a remarkable reduction of minus MXN 63 million in Suerox COGS, resulting in substantial annual savings.

This achievement reflects our committed commitment to continuous improvement and investment in our manufacturing capabilities, the increased capacity and cost savings position as well to meet growing market demand and further enhance our competitive edge. We extend our gratitude to our entire team involved in making this expansion a resounding success, and we look forward to the positive impact it will have on our company's growth performance. Also in Q2, we successfully concluded a project aimed at optimizing our product labels and the results have been nothing short of remarkable.

Through this initiative, we achieved a significant cost reduction of minus 55%, translating to an impressive annual savings of MXN 25 million. One of the key strategies behind this success was consolidating our label production from 18 suppliers to just 2. By streamlining our label sourcing, we have not only reduced complexity, but also minimize costs associated with the aspect of our operations. This optimization project exemplifies our commitment to continuous improvement and cost efficiency. The substantial savings achieved will further bolster our profitability and create value for our stakeholders.

I commence the efforts of the team involved in execution -- in the execution of this project and the strategic vision that has led to its success. We will continue to seek opportunities for enhancement across all aspects of our operations to drive sustainable growth. In Q1, we generated close to MXN 30 million in annual savings by reducing the number of packaging suppliers from 23 to 2 and the number of SKUs from 73 to only 12. And finally, the vertical integration of Vanart's manufacturing that will deliver a total of MXN 93 million in annual savings.

So that's it from a business review. What I wanted to highlight is that as we go forward to 2024, what you should expect is that behind all these productivity efforts that I just mentioned, you're going to start seeing our EBITDA margin to gradually improve from quarter-to-quarter until we reach the level of 24% that we have committed in February in our Investors Day.

Let me now pass it on to Tonio. Tonio?

[Antonio Zamora Galland, executive]

Thank you, Marco, and thank you to all of the Genomma team for the great work to deliver very strong results in a very challenging ForEx environment. Genomma delivered strong third quarter net sales, which reached Thank you, Marco, and thank you to all of the Genomma team for the great work to deliver very strong results in a very challenging ForEx environment. Genomma delivered strong third quarter net sales, which reached MXN 4.4 billion for the quarter, a 1% year-on-year increase despite continued macroeconomic adversity and currency headwinds everywhere.

Third quarter EBITDA margin increased by 2.3% year-on-year to reach 21.3% due to the productivity initiatives and the benefits we are deriving from our manufacturing plant and the productivity projects that Marco described earlier. ForEx headwinds from a stronger Mexican peso and the Argentina hyperinflationary accounting effects continue to impact the year-on-year comparison of the company's net sales growth and profitability.

We've again included a breakdown of the third quarter top line performance within our results release to provide you with context on the contribution of Genomma's hyperinflationary subsidiary relative to the company's consolidated top line results, which you can see here, even when we experienced very strong FX headwinds in all of the other markets. We want to highlight that despite all of these ForEx challenges across the region, this is Genomma's 20th consecutive quarter of top line and EBITDA consistent growth trend, as you can see in this chart.

Turning to our results by region. Third quarter net sales for Mexico increased by 16% year-on-year to reach MXN 2.1 billion with a strong core brand sales aligned with our strategy. You'll note that sales of Suerox, XL-3, Tio Nacho and Tukol again performed extremely well during the quarter. As you may see in this slide, the strengthening of the Mexican peso impacted our results in the U.S. and all the other contracts as we report in Mexican pesos.

We experienced a 16% appreciation of the Mexican peso versus the U.S. dollar when you compare the FX rate from Q3 2022 versus Q3 2023. Therefore, U.S. third quarter results also increased by double digits in U.S. dollar terms, which, as we mentioned earlier, was impacted by the conversion of those extremely positive results into Mexican pesos. Strong cost and expense control, a reorganized end-to-end supply chain team and an optimized media strategy, enabled Genomma to deliver a 350 basis point increase in the U.S. EBITDA margins for the third quarter '23.

The U.S. reached a double-digit EBITDA margin and the trend looks positive for the coming quarters. FX challenges impacted all of our markets in LATAM, as you may see here in this chart, the currencies of Paraguay, Ecuador, Peru, Brazil, Uruguay, Colombia and Chile, all of them had depreciation against the Mexican peso. Also worth noting is the negative trend of the Argentinian peso against the Mexican peso. And the volatility of this country increased during the quarter at the primary -- after the primary elections in that country. As you may see here, more than half of our markets experienced significant FX headwinds with double-digit depreciation against the Mexican peso.

Third quarter 2023 net sales for our Latin America operations reached MXN 1.9 billion, again, reflecting double-digit increases with most of Genomma's categories and countries when expressed in local currency terms, as Marco has described this quarter and the previous quarter. It's important for everybody to know that all of our markets are very healthy and growing very strongly. We are very proud of the team. However, we also acknowledge what the currency and the hyperinflationary effects have on our numbers, as you can see here.

I'm pleased to note that during the quarter, we introduced Suerox in Brazil, Argentina, Central America and Peru, which combined with outstanding core brand performance offset Genomma's negative results for that region. SGM&A decreased as a percentage of sales also due to strong cost and expense control, the reorganized end-to-end supply chain team to which we've referred earlier and media expense efficiencies during the quarter.

As Marco mentioned, we made significant traction on our productivity strategies and on optimizing our overall business. This is resulting in important savings, which will complement the savings, will increasingly derive from our internal manufacturing capabilities reflected in persistent sustainable progress. As Marco called out, our Toluca plant delivered more than MXN 7 million in savings during the third quarter and nearly MXN 22 million year-to-date. Further, the logistics program Marco described should continue to streamline our operation and transportation cost as an important source of savings in the coming months and quarters. As Marco noted, Genomma's cash conversion cycle was adjusted during the third quarter 2023 ending at 100 days, which is a 4-day decrease since September 30, 2022.

Accounts receivables amounted to MXN 4.3 billion and inventories closed at MXN 2.3 billion as of September 30, 2022. Days of inventories amounted to EUR 123 million, which is a substantial 38-year decrease year-on-year. Importantly, we continue to strengthen Genomma's financial debt maturity profile when on July 20, Genomma issued MXN 600 million additional to our [ LAB23 ] long-term bonds or [indiscernible] which was more than 1.3x oversubscribed. The related proceeds were used to prepay debt with institutional banks, strengthening the company's financial debt maturity profile and reducing the average yield that's [indiscernible] paid during the third quarter.

Here, you can see the maturity profile of Genomma's debt. Again, you may recall a couple of quarters ago, we had a substantial amount of short-term debt that matured earlier and the successful issuances of LAB23 and LAB 23-2 long-term bonds are reflected in this chart, and we will continue optimizing financial expenses and the maturity profile for the future. Also of note, after the third quarter end on August 4, 2023, by, we announced that Genomma prepaid the total amortization for the second tranche of the IFC's unsecured loan. And this prepayment amounted to MXN 272 million. This underscores our ongoing commitment to further strengthen our financial debt maturity profile and to optimize Genomma's average liability ratio.

Genomma again paid a cash dividend to shareholders on September 29, representing a total of MXN 200 million, and we intend to continue paying dividends on a quarterly basis. Also, we will continue buying back more shares. And once we get to the annual shareholders meeting, management will propose to our shareholders to cancel some of them to increase share value creation for all of us. In closing, we are pleased to report another quarter of strong results.

Importantly, Genomma's cost containment and productivity programs are clearly resonating as we mitigate headwinds and continue to focus on what we can control. Further, our actions to streamline our organization are enabling us to deliver significant shareholder value via enhanced profitability. We are proud to be alongside the best people, the best brands and the most powerful innovation engine in our industry. With that, we are now ready for our Q&A.

[Operator]

Thank you, Antonio. We will now begin the question-and-answer session. [Operator Instructions]

Our first question comes from Alvaro Garcia with BTG.

[Alvaro Garcia, analyst]

Great. I have a question on your capacity utilization for Suerox. I was just wondering if maybe you could provide an update on -- I mean, congrats on the very strong growth out of that specific category. If you could provide an update on how you're thinking about your capacity utilization now and production capacity going forward?

[Marco Sparvieri, executive]

Thank you, Alvaro. Right now, we are at full capacity in our plants. We are running at a rate of 8 million to 9 million bottles per month. We are at a full capacity at our [ Bona Fund ] line where we are running at the rate of anything between 10 million and 12 million bottles per year -- per month -- sorry. And we have -- for 2024, we are going to be okay from a capacity point of view because we also have a few contract manufacturers that are helping us with Suerox. But we are going to run out of capacity by the end of '24, starting of 2025. So we are already -- we started the project to increase our capacity buying a new line for our plan.

This project has been running for 2 to 3 months already. We want to see some lines in Europe and China, and we have already made the call to purchase a new line that actually Tonio is negotiating, and we expect that line to start the process of installation and commissioning by the beginning of next year. With that line installed, which we expect to be running at the beginning of 2025, we have another 4 years of good capacity for Suerox production. I don't know if that answers the question.

[Alvaro Garcia, analyst]

Yes, it was very clear, very clear. And then just one follow-up also on Suerox. I was wondering how are you prioritizing new markets? I would love to sort of hear what markets across your territories do you think Suerox has the most potential in?

[Marco Sparvieri, executive]

No. Obviously, the U.S. is the one with the highest potential. We expanded the brand to the U.S. around 2 years ago, and it is performing really well. But right now, I think that with the exception of maybe a few small [indiscernible] countries, we have already expanded Suerox to every market. So we have Suerox in Chile since 1.5 years ago. We have Suerox in Argentina since this -- since the beginning of this year. We have Suerox in Peru. We have Suerox in Colombia that is launching in the next quarter. We have Suerox in Ecuador launching this quarter. We have Suerox in Brazil that launched in Q2. Central America launched at the end of the last year, the Caribbean also. So pretty much all the markets will be selling Suerox by the end of this year.

[Antonio Zamora Galland, executive]

Marco -- thank you, Alvaro, for your question. And expanding a little bit on Alvaro's question, we have heard from some investors and analysts about share gains or share. What is the outperformance in Mexico in terms of share of market because there's been a lot of questions about that. I don't know if you would like to share something...

[Marco Sparvieri, executive]

Yes. We continue to grow market share in Mexico despite of, obviously, Mexico being the market where we have been the longest with Suerox and where the brand has a significant size, of course, but we continue to expand market share. Remember that this category is massive. I mean we're talking the isotonic category, where Gatorade, Powerade electrolyte, they all compete in the same carriers. We're talking a very, very large category and our consumer proposition that is, we believe, is superior. There's plenty of room to continue to grow in Mexico, plenty. I mean, plenty of room.

[Operator]

Our next question will come from Ana Cecilia Reyes with Grupo Bal.

[Ana Cecilia Reyes Esparza, analyst]

Thank you, Marco, Antonio, for your presentation. Congratulations, first of all, on your good results. I was reflecting on the announcement about your productivity initiatives. And I was wondering about concentrating from certain number of suppliers to only suppliers for labeling and packaging. Do you -- what do you think you might be facing a concentration risk and in case of one of the suppliers fail to deliver, do you have a plan just in case?

[Marco Sparvieri, executive]

Yes. Good question. Thank you, Ana Cecilia. We -- I mean, obviously concentrating has the benefits of better negotiation power. We are -- I mentioned in the presentation, but we are getting more than 50% cost reduction, both in packaging and in labels. I don't think we have a risk of one of these -- first of all, the reason why we are choosing 2 instead of 1 is to have a backup. So we have a backup just in case, but we are choosing top-of-the-line suppliers. I mean these are multinational companies with very strong manufacturing capacity, top-of-the-line, machinery equipment. And I am very confident that if anything happens, worst case, we moved to the second supplier. But I don't think that we're going to need to do that.

[Operator]

Our next question will be from Rodrigo Alcantara with UBS.

[Rodrigo Alcantara, analyst]

The first one would be -- I appreciate the details on the savings from the plant, just curious if you can put those numbers in the context of how much of your current production is being internally produced? How much is externally produced? And if you could give us an update on where we stand in terms of export the products from the plant -- exports to other countries, to [indiscernible]? And my second question would be -- congrats on the performance on Suerox, right? Just curious if we can take the discussion on Asepxia understand a bit better what is driving the decline in sales in your view? Will it be like a category thing that's declining market share losses? Or just to understand a bit better what is driving the performance in Asepxia and what are you doing there to turn around the category?

[Marco Sparvieri, executive]

Okay. On the plant, let me provide perspective. So it really varies by brand and by category. So let me go line by line, okay? So Suerox, as I mentioned in the previous question, we are at full capacity and less than half of our Suerox is actually produced in the plant because we have no more capacity, okay? That's why we had to install a second line at [indiscernible]. The plan is to increase that capacity, adding a line -- incremental line in 2024. That's Suerox.

On hair care, we are producing 100% of our Vanart volume is produced in the plant and around 60% to 70% of our Tio Nacho volume is already produced on the plant, not only for Mexico, but also for the markets that import from Mexico. So all the Andean region, Chile, they all import from Mexico, Argentina because of the import restrictions and Brazil, they produce locally, okay?

Then our facial care line is still in the commissioning process. So we're still not producing anything on facial creams. Body creams, 100% of our volume of Goicoechea is produced at the plant for Mexico and 100% of the volume that we export to other markets is also produced at the plant. Pomada de la Campana, same thing. 100% of the volume in Mexico is produced at the plant and 100% of the volume that we export to the U.S. is produced at the plant, okay?

So that's kind of like hair -- [indiscernible] Personal Care and Suerox. And then for OTC, 100% of our next brand is produced at the plant. 100% of our Bengue brand is produced at the plant, 100% of our X-ray volume is produced at the plant. And as we get the approvals, the GMPs for the licenses that have been approved over the past months. We will continue to move the volume to the plant. That's it. I don't know if that's that the perspective you needed, Rodrigo?

[Rodrigo Alcantara, analyst]

Yes, yes, yes. That was very, very helpful. Just maybe we can go to the Asepxia question would be great.

[Marco Sparvieri, executive]

In Asepxia, it's really a challenge. We had a plan to retarget the brands to other consumers that we put in place in -- at the end of Q1, but it didn't work. And so now we are we are redesigning our entire strategy from scratch with that brand. And hopefully, we're going to have some good news for the next quarter earnings call, where I can tell you that we're relaunching the brand with new packaging, new communication, new everything. So we're working on that right now. But it's definitely a headache. I mean, we -- it's the only brand in our core brand portfolio that it's been challenging to us right now.

[Operator]

This concludes our third quarter's earnings conference call. Thank you for your attention.

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