Camil Alimentos SA
BOVESPA:CAML3
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Camil Alimentos SA
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Good morning and welcome to Camil Alimentos conference call [indiscernible] . With us today are Mr. Luciano Quartiero, Director, President; [indiscernible] and the company's Investor Relations. [Operator Instructions] [indiscernible] involve risks and uncertainties and for the future events, therefore, refer to events that may or may not occur. Investors should understand [indiscernible] may affect future conditions events in the results may differ materially from those expressed in such forward-looking statements.
We've announced [indiscernible] presentation followed by private presentation and then we'll open for questions. Thank you.
[Foreign Language] [indiscernible] comments on the results of 2021. 2022 is special year and more the execution of our expansion. We informed to make out like once again. We are [indiscernible] a international company, one of the most outer platforms earning or leaders in the food market camera. Today, we are already present entries and several sales we trend a relevant restation of consumers and of approximately 7,000 employees.Since the IPO in 2017, We have [indiscernible] strategy investment with BRL 1.1 billion [indiscernible] LSL made it in 2018, the fifth largest grain company at the time, in addition to all the relevant acquisitions we [indiscernible] that we will elaborate on the next
Three new categories [indiscernible] in the new country in America with all of the in all months efficient iterations and distribute mapping of the commercial fitment and operating synergies.[indiscernible] Starting with Brazil.
We completed the incorporation of [indiscernible] or largest company in the positive end [indiscernible] in this with more than 40% of cost to market share in the region. These leaders in our plan, we have to course our interim inking and expanding our ratio provides important growth for other categories in Brazil. In addition, we letters [indiscernible] Category.
We have successfully integrated [indiscernible] in a short term leverage inside million this year in SG&A synergies. In addition, in of last public company in the center [indiscernible] life company entry into the cost. This is a major ironstone in [indiscernible] announced the and the [indiscernible] And then investment made in the commission [indiscernible] is your interest you on the right foot that has already and is reaching several or [indiscernible] in Sao Paulo.
[indiscernible] which in the Sweden can Framing up the same able or genius sessions the main coffee produced in rigs and lower production capacity both in 6,000 [indiscernible]. We are confident in this execution. International entity [indiscernible] potential in addition, we also announced the [indiscernible] and practicity among an advantage in acquisitions I like to highlight other 2 fronts [indiscernible] revenue and at the , which we state scale gains in a huge unit
Insertion in our [indiscernible] we also [indiscernible] 113 [indiscernible] we also and the edge and to focus on generating value to shareholders. Moving to the up from [indiscernible] very important. We announced something above the average historical average. And now -- [Foreign Language] and our commercial strategy. So we stood out vis-a-vis the competition, potentializing the growth of our premium brand Camil in the category. We also posted 2-digit growth for rice. And this is also a highlight for the coming rent. This stems from our cross-selling strategy and mix of products that are highly recognized by consumers. Camil's net price was down by 20% in the quarter and it grew 2% in the year. Beans, we also grew 2 digits in volume once again with a highlight going to the Camil brand. This effect was partially offset by the reduction in profitability in the year. In a competitive scenario when you look at the prices in Brazil. We understand that this was a one-off effect and the category is in its path towards a resumption of growth. Camil's net price was down by 1% in the quarter and grew 1% in the year. Sugar -- we grew 1% in the quarter and remained stable in the year. The result was mainly driven by sales growth of the leading brand in the quarter and lower pricing brands in the year. Once we look at the sequential comparison, the volume was reduced as because of the disruption in the total volume of refined sugar by the main sugar supplier. This is also a one-off scenario, which was offset by the profitability of the category in the period. Camil's net price was up by 41% in the quarter and 46% in the year. Now in the fish category, the volume was impacted in the period by lower sales from the leading and lower pricing brands of sardines, partially offset by the growth in Tuna. The volume was below expected, with the consequence disruption in the sourcing of local and imported raw material, partially offset by the sales effort coming from the tuna category. Camil's net price was up 14% in the quarter. and 17% in the year.
In the international category, we reported significant growth in the quarter. Now we already saw a reduction, which was expected of sales in Uruguay due to the reduction of transfer stocks from 1 harvest to the other and consequently, less availability of raw material for sales last year. In Peru, we also had lower sales due to the country's economic landscape in the country with drop of packaged products vis-a-vis products rise in bulk. This effect was partially offset by the excellence performance in Chile, which has been showing growth in sales and profitability. .
In Ecuador, we already talked about that without any basis for comparison, we were able to aggregate the results from the date of completion of the transaction. We are very optimistic about improvements in efficiency and sales.
And we are moving forward with the integration process in our business model. And finally, I would like to highlight that we have started a new cycle, full of challenges with the expansion of our capacity to generate business and focus on the fast and efficient integration of our M&As.
The team is 100% focused on maintaining efficient structures and taking advantage of sales and financial synergies with the new acquisitions as well as focusing on the launch of the category of coffee in Brazil.
Now to elaborate on the financial performance of the quarter. I turn the floor over to Flavio. You may proceed, Flavio.
Thank you, Luciano. Starting the analysis of the financial performance. We reached a milestone of BRL 10.3 billion in gross revenues for the year and BRL 2.6 billion for the quarter. Net revenue totaled BRL 9 billion in the year and BRL 2.3 billion in the quarter, increases of more than 20% when compared to the previous year.
In the revenue front, it's worth mentioning that in Brazil, both prices and volumes had a positive impact vis-a-vis the year before, as already explained by Luciano by category. In the international business, we had the exchange rate effect on the negative side, but well offset by the increase in prices and volumes in the quarter.
Now moving on to the financial highlights of the quarter. COGS was up by 24% with an increase in the prices of packaging inputs and also raw materials, mainly sugar in Brazil in addition to higher volumes and the addition of the acquisitions in the company's results.
SG&A grew 40% and accounting for 40% of net revenue. That growth occurred in -- due to sales expenses with increase in freight and company sales level in the period in addition to G&A expenses related to M&A costs of BRL 17 million. Other operating revenues amounted to a positive BRL 107 million in the quarter due to nonrecurring effects totaling BRL 106 million in the quarter and the year related to the valuation of the advantageous purchase of Dajahu in Ecuador, discounts obtained in the renegotiation of debt of Cafe Bom Dia, a company apart in 2021 and under judicial reorganization and the difference calculated in the renegotiation and payment of taxes installments also of Cafe Bom Dia.
Taking these factors into consideration, EBITDA for the quarter reached BRL 234 million, up 60% with a margin of 10.3%. Excluding the above described nonrecurring effects coming from other operating revenues and other M&A expenses totaling BRL 86 million, EBITDA stood at BRL 146 million with a margin of 6.4% in the fourth quarter of 2021.
It is also worth noting that adjusted EBITDA, both in the quarter and in the year were impacted by Brazil's performance in the fish segment. With raw material disruptions in charting in the period, and lower profitability in the bean category as explained by Luciano.
Both represented around 1 point margin in the expected result for the year. Moving on to the highlights of costs and expenses for the year. COGS showed growth with an increase in the prices of packaging inputs and also the acquisition cost of raw materials mainly sugar and beans in Brazil.
The cost of goods sold as well as other indicators was also impacted by the entry of wheat into the pasta category in Brazil and also by Ecuador in International. SG&A for the year grew 18%, however, it remained at levels of 14% of net revenue, maintaining our efficient and lean structure as we have always stressed as being a priority for our business model.
The growth occurred with the entry of the results from Ecuador and Santa Amalia in SG&A, in addition to the increase in sales expenses in Brazil, represented by increased freight costs and increase in the company sales level. It is worth noting that G&A was also impacted by M&A expenses in the period, such as advisory and legal fees amounting to BRL 17 million.
Other operating revenues amounted to BRL 109 million in the year for the same nonrecurring reasons already explained, totaling BRL 106 million. In the year, EBITDA reached BRL 810 million with a margin of 9%. Excluding the nonrecurring effects described above from other operating revenues and other M&A expenses, EBITDA was BRL 721 million with a margin of 8% in the year. The company's total debt was BRL 3.3 billion, an increase of 48% and due to the new funding to cope with the recently announced acquisitions.
Net debt over EBITDA UDM in the last 12 months reached 2x at the end of the period. Under -- even considering the 4 acquisitions made in the last year, the company is still leveraged with room to meet its commitments and proceed with its growth strategy. CapEx for the period was BRL 1 billion with BRL 848 million in M&A and BRL 244 million in other expansion and maintenance projects.
Finally, I would like to take this opportunity to reinforce that we executed 2 buyback programs in the past year and canceled as a subsequent event, 10 million shares after the beginning of our new current buyback program, which is the seventh program since the IPO.
We are at 360 million shares in total and currently repurchasing up to 10 million shares within 18 months. Now very briefly, and to conclude, I would like to mention a few ESG highlights. We believe that the materiality strategy is the most assertive one for us to focus on topics that make an effective difference in our business and our surroundings. This year, we carried out our materiality matrix with consultation forwarded to more than 3,000 stakeholders contemplating all the countries where we operate.
We are preparing to bring our sustainability report to the market in the first half of 2022, following the best global practices and methodologies for transparency and disclosure, including GRI, SASB, TCFD, and our actions in support to the UN's agenda 2030.
Today, we are nearly 7,000 employees and we have strengthened our internal ESG actions with working groups focused on environmental, procurement, social and governance actions in all countries of operation with targets for the entire Executive Board and actions aligned to the global compact.
It is also important to highlight that all of our actions are based on the strategic pillars disclosed to you during our commute. Our actions are focused on quality and sales, purpose and people and efficiency and growth. In regards to the environment in 2020, more than 40% of the rice has produced by Camil was used internally to generate renewable energy, and 95% of the total energy used in Brazil came from renewable sources.
In order to increase this use, we are developing a new thermal [indiscernible] plant with capacity to consume up to 100% of the house generation in the new Cambie project with funding linked to the issue of green debentures by the company in 2021.
This is an action totally connected to actions that help us to -- with waste disposal, emission reduction, generation of renewable energy. And it also provides a differentiated look at ESG associated to the company's operations.
On the social side, we support projects related to income generation such as the free online confectionery course called [ Dolce Puturo ] Union. In addition to a training program in the community surrounding our plans in line with the need for skilled labor.
Still in the social area, we achieved levels of excellence when it comes to reducing accidents, as you can see. And we should have more indicators and information for you in the publication of the report and also on a quarterly basis for monitoring purposes.
In closing, we have made important expansion moves in 2021. And we believe that our broad and proven experience acquired over the years with the integration of our acquisitions, places us in a unique position not only to correctly identify potential acquisitions but more importantly, to quickly integrate them into our business model, delivering these gains in scale and efficiency.
We are focused on maintaining an efficient structure and always evaluating new expansion opportunities that we can exploit with our know-how and our distributed platform in Latin America. Now we remain at your disposal for the Q&A session in case you have any questions. Thank you all very much.
[Operator Instructions] Our first question comes from Mr. Gustavo Troyano from Itau BBA.
I have 2 points that I would like to elaborate with you. First relates to profitability, and I'm focusing more on your first quarter of your fiscal year. Could you elaborate a bit more about how profitability evolved from the fourth quarter to now? And whether you could tell us whether your fish supply issue has been resolved or if there is anything else that could be done in that regard?
And in terms of beans competition, if that still remains a problem, if you give chat some light in profitability as a whole, we're focusing on these -- 2 points that will be very useful. The second question relates to coffee. Luciano, you talked about that expansion from 36,000 to 60,000 tonnes. Could you please also share with us a little bit about this timing until you think that expansion will be finalized in the ramp-up time that is necessary to conclude that activity in the next few months.
Still is talking about coffee. What was the reaction of the competition once you enter the market with the Union Coffee Bread? What was the behavior of your competitors?
Gustavo. These are excellent questions. So about profitability first. I think my first observation is that, historically, Camil has always operated between 10% to 11%. And in this year that just ended, we excluded nonrecurring effects. So that was 8%. And as you said, there was a big impact coming from our fish and beans categories.
So my first observation to you about the margin is that Camil, yes, we expect to resume to go back to that level of 10% to 11%, which is our historical level. And we have great expectations about the recent acquisitions. In the 4 acquisitions, the 2 new segments, Ecuador and the operation in Uruguay, the 4 acquisitions are operating at margins above our historical levels.
Therefore, for the mid-range, we have a very good expectation in terms of this recovery, and we are sure that we will be able to resume previous levels. In the first quarter, we had the margin recovery. Fish is an issue that hasn't been surpassed yet. But in the first months, we were running at the expected levels of the company, but beans we are expecting some improvement. This is a process that we will occur gradually throughout the year.
We do not want to miss that new volume level that the company has achieved. So we expect this recovery to happen gradually. But what happened in the first 2 months of the year really surprised us, positively speaking. And so I think we are on the right track.
Now in terms of coffee, the expansion of the plant, I mean, should be ready by October and November of this year. We started selling Uniao -- we thought we are going to start selling in March. Well, it was at the end of March. So we only had a few days of sales of Uniao in March. So April was, in fact, our first full month with the product clients and consumers are really pleased with the product.
Our growth curve in terms of volume is within expected levels and the margins that we achieved with this first month of operation was above Camil's historical levels. I mean, at first, in terms of your question about the competition, I do believe that we will hear from them.
But right at first, since the volume we have to dispose of is still small, we are concentrating our sales in large clients. So this first month, we haven't felt any direct reaction from the competition because as our volumes are still low, the impact in the market is also low. But we believe that it's coming.
But I think what really matters in terms of our first 40 days. And I often say that we have to climb steps one at a time. The first step is not simple because we put the products on the shelves and it has to be on the shelf with the right pricing, and this is what happened and users are beginning to test our products, and we are already seeing some customers buying it again, which is a great sign. It means that the product is being well accepted. So in fact, the company was already very optimistic in this segment, and we remain optimistic.
Our next question comes from Mr. Guilherme Palhares Bank of America.
Can you hear me?
Yes, we can.
Well, Well, first of all, I would like to thank the IR team for putting all of the information on the website yesterday. That was really important. I have 2 questions. It's a follow-on question on Gustavo's question. Whenever we talk about expansion in Santa Amalia, the expansion of your coffee capacity and then you have the thermoelectric plant. What do you have in mind in terms of CapEx for 2022?
And in addition, I mean, coffee, I mean, with a margin above your historical levels, it's very much concentrated in a few customers. As the company grows and becomes more diversified in terms of channel, do you believe it's possible to maintain this margin or even with the potential upside in terms of what you see today?
Thank you for your questions, Guilherme. Very good questions. In terms of CapEx, let me give you some figures. The investment in the thermal electric plant is BRL 150 million, and it's being funded through that green bonds transaction that we did.
Our recurring CapEx is usually around BRL 100 million to BRL 120 million a year. I mean, in terms of increasing our capacity, faster capacity and have some potential gains, investment will be around BRL 70 million. And to grow the coffee business will be around EUR 20 million. So these are the major investments that we hired in the year.
We have another investment -- significant investment that the company is being evaluated, and this will be a new rice plant in the south of the country. This is a project that we've been studying for a few years already, and we believe that it will be implemented in the next 18 to 24 months.
And this would require a more robust investment and it will be spread around a period of 2 years. So this will be a new plant state-of-the-art plant, extremely efficient. And so I think this would be a reference in the market when it comes to production cost. This investment, I mean, has been on our radar for a few years. And with this interest rate scenario, we've been reassessing all of our investments. So this is a decision that we should take in the next coming months.
And once this investment is approved, once it is implemented, this would have an effect of approximately BRL 100 million to BRL 150 million this year and the same amount for the following year in case we decided to move ahead at this time. Now in terms of the margins for coffee, yes, we started well.
But as we start expending into other channels and increasing our distribution, that's when I expect to see some response or some reactions from our main competitors. But what I think is interesting about our model is that our production is extremely efficient, the plant is in the right location. We are concentrating the position in a single site, which is a producing region that has the ideal tax regime. Therefore, I'm very optimistic because I believe we will have very competitive costs.
So going forward, I think in the future, there may be an impact in the short run in view of our growth and the rebalancing of the market positions amongst main players. But in the midrange, we believe that this will be above our historical levels. So this is what I can tell you so far.
That's very clear, Luciano. Just as a follow-up, can you please tell me a little bit about this new rice unit in Rio Grande do Sul. Could you please share with us a little bit? I know it's already too soon. But just as a general overview, what will be possible for you to increase in terms of capacity or even in terms of costs and synergies and maybe lower cost for the company?
Guilherme, I mean, this is a topic that I mean, we will give you more information as the project evolves. But the main idea is that we want to increase our production capacity in this region, which is in the west part of the state of Rio Grande do Sul municipality of Itaqui. So the initial idea is to increase our production capacity by 25% and discontinue the oldest plant of the company.
And this will bring about a significant cost reduction, and I would rather not comment about this right now. But this is a very interesting investment. But as we evolve, I mean the -- our IR team will probably give you more information as we move along.
Our next question from Lucas Ferreira from JPMorgan.
First of all, could you please tell us a little bit about the consumption landscape in Brazil. And talk a little bit about this quarter and how things are evolving in this first quarter as well in terms of consumption, higher inflation, and whether this has impacted your business? I mean, do you see any impact in volumes? And what is the scenario you see in terms of volume in your main categories this year?
Secondly, in regards to pasta, more particularly about pasta. We see that this is a very critical sector especially concerning the impact coming from wheat. I know this is not a very relevant business for you at the moment. But if I could hear from you anything about the profitability of the business transfer of prices. I mean anything you can tell me about that would be nice.
Lucas, thank you very much for your questions. I think -- well, first of all, well, we are closing this year with a very significant growth. Myself and the rest of my team, we are very happy with our performance of this past year. Once we look at the growth, both coming from grains and also the other categories, but the categories where we had an impact like in fish.
If it weren't for the lack of fish, we would be able -- we would have been able to deliver growth. And the same thing goes for sugar. I mean, there was some lack of sugar in the middle of the year. And I think I talked about that in previous occasions. And if it weren't for that, we would probably deliver growth.
But more importantly, when we talk about grains or when we talk about rice and beans, where we saw significant growth. Most of this growth came from the Camil brand. So when we look at our growth in rice of the Camil brand was almost 12%.
And overall, the overall growth in the category, I think it was just 8% or 9%. And whenever we talk about beans, the growth was 21%, 22% and the Camil brand grew 25%. This shows the resilience and the strength of the brand. Therefore, we have been monitoring this down trade move very closely.
And it is very clear to everyone that the population has been losing purchasing power in the past few years, but the company has been very diligent in protecting and growing our main brands in every single category.
When we look at the performance of the Camil brand vis-a-vis the performance of rice and beans in March and April, it's better than the lower pricing brands on a comparative basis. So this just shows that our execution has been very good in the period. Now Well, I think you also had another more general question about our expectations for this year.
We expect to grow in every single category. This is an adverse scenario, but the company is very much focused on being even more efficient, reducing costs and trying to get a product with a good pricing to our consumers and ensure returns that are back to historical levels. Despite these adverse scenarios as some of our categories are very resilient.
Our -- the company is very optimistic with what we see coming forward despite all of these adverse scenarios. Now talking about pasta. In fact, it's been a challenge, especially regarding origination, all the price increases, the cost of wheat due to the war in Ukraine and Russia, but I think we are experiencing a very unusual scenario.
And in the first 2 months, the company has performed in terms of pasta margins above Camil's historical levels. The company was able to transfer prices in all of those cost increases, the company was well positioned strategically speaking, in terms of supply. So we already have unlocked volume for the next coming months or very competitive cost. So we are posting the necessary price increases just to cover our replacement costs.
But what has happened due to the current landscape, the feeling we have is that the entire retail is more sensitive to these increases because we understand what's happening. I mean so price of wheat in the last 6 months or maybe in the last 4 months, I would say. We saw in a significant increase between 40% to 60% of the price of wheat.
We didn't transfer the entire amount of that increase, but we are getting there. So we believe that in the next 60 days, we will be able to transfer the remaining of that increase just to cover for the replacement cost. So the volume performance is very good.
Profitability is good. Our position in terms of flower was well orchestrated well bid. So our profitability is well in place for the next coming months. So I think this is what I can tell you in terms of where we stand at the moment.
[Operator Instructions] Our next question comes from Mr. Roberto Costa Via chat.
Congrats on your results in the presentation.
Clearly, what is Camil's stake at the national coffee market?
Camil is entering the coffee business now. Our estimate is that the coffee market has an average monthly consumption of 100,000 tonnes. So in this in Camil's growing process and considering our current capacity, we can reach 3%, and this is an achievement that we want to reach at the end of the year.
I mean 1,000 tonnes tons a month is what we will have by October and November. And so with that, we will have the capacity to reach 5% of the market based in consumption. Our desire is that in the next coming years, we will be able to resume leadership with the Uniao brand.
Because Uniao brand has been a leader 20 years ago with a share of 25%. Well, certainly, it will take some time until we get that. We would do that gradually, but the company is getting prepared to resume the leadership of the brand.
Next question from Gabriela Susan also through the chat.
Luciano. I would like to congratulate your efforts because you fulfilled -- well, you really deliver what you promise because you entered into the coffee business, which was a promise during the community. I have 2 questions. First, to despite all of the initiatives, the market hasn't yet responded in terms of your shares. So you went from 410 million shares, and you are getting close to 360 million shares. Do you intend to proceed with the buyback of shares?
And [indiscernible] I have a very qualitative question. Thinking in the long run, where do you think you Camil wants to be in the long run? Where do you see further room for expansion, other entries in new categories? What do you think that if you add another product category, whether that would add more things to the company or you will be out of the scope of the company's core business.
Gabriel, thank you very much for your question, and thank you for monitoring our financial performance and our shares so closely. In terms of the buyback program, this is a topic that has been extensively debated in our Board. And throughout the last few years, we have shown and we are convinced that doing the buyback, it's a very clear way to add more value to our shareholders.
So we try to make a comparative evaluation of what would be the possibilities in terms of capital allocation vis-a-vis other companies. And I think that as long as we have this disconnection between Camil's price, which is being traded in the market as the actual intrinsic value of the company, we should then continue to discuss the topic.
And if it makes sense, we will then approve new buyback programs. So when we look at the price of our shares, and we compare that to other alternatives we have, even in terms of acquisitions, Oftentimes, we cannot make an acquisition at the price of our stock.
So I think that, yes, this buyback topic will be constantly revisited. And I do believe that we will be successful and we will probably be approving other programs like that by the Board.
Well, continuing with the answer and in relation to the categories, Camil after it entered into these new categories in the past 15 years, if you go back to 2007, Camil was 100% focus on rice and beans. And from 2007 until 2021, we entered into 4 other countries, and we added 4 new categories.
Camil especially in Brazil, where we entered into these new categories. We saw that it made a lot of sense because it made there were a lot of synergies. There was a reduction in the cost to serve.
And so that was very important for our growth, and we saw a lot of value in growing like that and gaining scale. Camil also wishes to get into a new category in Brazil, and we are working to that end still in the wheat category. And we see a lot of sense in terms of taking that diversification model to be a multi-category company and take that model in the other countries where we're already operating and new South American countries that we wish to get into.
So we see a lot of value in time. We will continue to see value, and we will continue to do what we've been doing in the past years.
[Operator Instructions] Our next question also came via chat from Mr. Alexandre detovu. What is the expected gross margin for the coffee segment? And in what stage is your renewable energy project? And when do you believe that you will have a start-up of that thermoelectric plant funded by the green seal?
Well, the coffee margin, well, Camil doesn't disclose margins per segment. But as I was saying, the first month of operation, we operated above historical levels of Camil, which is around 10% to 11% of EBITDA. So we started very well in terms of coffee profitability. And I think we might have some difficulties as we ramp up and as we grow further, but in the mid- and in long range, we will reach levels above Camil's historical levels.
Our new thermoelectrical plant. As I was saying before and the way it was funded, is an investment of BRL 150 million, and that construction is expected to be ready by June of 2023.
And it was quite interesting because the plant we use all of the rice husk that has been generated in our plants in the region where the plant is being built. And because of that, Camil will become and self-sufficient in energy and all of the energy generated in that plant could also be used by our other plants in that part of the country in the south. I would just like to remind you that this plant -- I mean, the conclusion of that plant will also increase our production capacity. But today, Camil is already operating in power cogeneration. In the other 2 plants we have in Rio Grande do Sul.
One in [indiscernible] and the other one in Itaqui, we are already producing energy based on the burning of rice husk and that accounts for approximately 40% of our energy need. So with this expansion and the new plant, we will become self-sufficient.
We even believe that there will be some surplus that could be sold in the free market. But in fact, today, we are already operating in this segment.
Thank you. The Q&A session is now concluded. We would like to thank you all for joining us today, and have a very good day.