Camil Alimentos SA
BOVESPA:CAML3
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Camil Alimentos SA
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Good morning. Welcome to Camil's video conference to discuss the results of the fourth quarter and year of 2023. Present here today are Mr. Luciano Quartiero, Director, President; Flavio Vargas, CFO and IR Officer; and the company's Investor Relations team. We would like to inform you that this event is being recorded. [Operator Instructions] We would like to emphasize that any forward-looking statement that might be made during this conference call related to Camil's business outlook, projections and financial and operating goals are based on beliefs and assumptions of the company's management as well as information currently available.
These may involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors must understand that such general economic industry conditions and other operating factors may lead to results that differ substantially from those expressed in such forward-looking statements.
We will start the presentation with Mr. Quartiero, followed by Flavio's presentation. And at the end, we will open for Q&A in approximately 15 minutes. Thank you.
Hello. Welcome to the comments on the results for the fourth quarter and year of 2023. Before addressing the results for the period, I would like to express our solidarity to the victims of the recent rains and flooding in Rio Grande do Sul.
Although our operations were not affected, we are mobilizing resources to help those who have been most impacted. May we together find a strength to rebuild our communities.
In this first slide, we bring you up to speed on Camil's position as one of the most complete product platforms and leading brands in the food market in Latin America. Our size reflects the realization of a successful strategy of expansion through acquisitions in the domestic and international markets. We have 8,000 employees in 33 plants in Brazil, Uruguay, Chile, Peru and Ecuador with leading brands in a prominent position in all the segments in which we operate.
On Slide 3, we highlight the categories of operation and the main indicators for the quarter and the year consolidating Camil's position as one of the largest food brand platforms in Latin America. Our operations resulted in gross revenue of BRL 13 billion and a record net revenue of BRL 11.2 billion for the year, both up more than 10% year-on-year.
We achieved a record EBITDA of BRL 914 million, representing an increase of 17% compared to the 2022 adjusted EBITDA, which excludes the advantageous purchase of Mabel from the comparative base. The EBITDA margin stood at 8.1%, an increase of 0.5 percentage points compared to the previous year. In terms of volumes, we grew 1% year-on-year, driven by the increase in high volume -- in high-value volumes in Brazil.
In the quarter, however, we saw a 7% reduction due to lower international volumes. This movement was anticipated due to our business model in Uruguay.
Let's move on to the next slide to get into the details of each segment and category. In the high turnover segment, made up of grains in Brazil and sugar, volumes increased by 0.5 percentage points in the year and fell by 3.5% in the quarter. In the fourth quarter, it's common to see a weaker seasonality in volumes, especially in this past year, when rice prices rose considerably from November and December 2023 onwards.
It's common to see a temporary reduction in purchases by retailers in this period as they wait for the harvest season, usually March and April, when rice is in greater supply on the market, just to see prices fall and then they make a bigger purchase.
Sugar, on the other hand, has operated below its potential this year. Sugar retailing operates in a challenging scenario, and we have taken steps to minimize these effects as seen in sugar volumes with the continuation of export activities with our main strategic partner. The scenario remains the same.
Now moving on to the high-value category, which includes fish, pasta, coffee and cookies. We recorded a 25% increase in volume when compared to the previous year mainly driven by the volumes of cookies and coffee, our newest businesses in the company and the ones that are currently in an expansion phase. Sequentially, we also saw an increase in volumes driven by the seasonality of fish. Going into the details of each of the high-value categories, we continue to show good profitability in pasta concluding the project to expand production capacity at the plant for this year and preparing to expand our pasta business into new regions.
As for coffee, we also completed our capacity expansion and carried on with our strategy of growing sales of the União brand, achieving more than 4% market share in the Sao Paulo and Rio regions. It's also important to note that União Coffee expanded its portfolio and reached the entire country with new packaging versions to see consumer preferences.
Last year, we launched 250-gram pouch and a vacuum pack of 500 grams. And we are now working on new launches to further complement our portfolio. In cookies, the acquisition of Mabel presented operating challenges at the beginning, but we reached results quickly in 2023 with higher volumes and an acceleration in our turnaround plan for the acquired company with the expansions of pasta in coffee, in addition to the cookies operation, which is capable of doubling in sales.
We believe we are well positioned to drive expansion opportunities in the high-value categories for our business, both in terms of volume and also in terms of profitability growth. The high-value category represents an important step towards further strengthening our position as a food platform with leading brands as well as a variety of higher value-added products.
In the International segment, we recorded a 4% reduction in volume compared to 2022 and a 16% reduction in the quarter. This result was already expected and was due to the lower availability of volumes for export in Uruguay in the period, with exports concentrated in previous quarters during the year.
In 2023, the reduction in volumes was due to lower sales in Peru and Uruguay. Throughout the year we made investments in Peru and Chile and also improved the profitability shown in recent quarters. In Peru, we modernized the mill and increased storage capacity. In Chile, Tucapel began its transfer and modernization of its Santiago plant to a new and larger site, which will bring us greater productivity and efficiency. We remain confident in our growth, and we are preparing ourselves to increasingly seize the expansion opportunities of those we have acquired, both in volume and profitability.
I will now hand over to Flavio to comment on the financial results for the period. You may proceed, Flavio.
Thank you, Luciano. Moving on to the financial highlights of the year. As Luciano mentioned, we achieved net revenue of BRL 11 billion, growing approximately 10% and that was a record for the company, highlighting a new level of scale.
Cost of goods sold grew by 11%, mainly due to the increase in Brazil's high turnover in grains and sugar and the high value of the cookies operations. As a result, our gross profit amounted to BRL 2.3 billion, with a margin of 20% for the year.
SG&A fell by 1.1 percentage points compared to annual revenue reaching 15% of revenue. It is worth noting that the company has been carrying out plans to optimize and review expenses, aiming for greater efficiency and the identification of new synergies in the acquisitions made. We have managed to maximize the synergies and profitability of acquisitions from 2021 to date, exceeding our targets and reinforcing our confidence in the growth of the new businesses.
Now other operating expenses reached a positive BRL 57.2 million in 2023. Of this amount, the nonrecurring balance was a positive BRL 45.8 million. This effect occurred mainly in the third quarter of '23, with the reversal of a portion of the provision for the transfer of the industrial asset of cookies from the seller's plant to our Mabel plant as well as the reversal of the Café Bom Dia debt and the extraordinary income from PIS and COFINS attributable to the acquisition of SLC Alimentos in 2018.
In the year, there was approximately BRL 18 million in price adjustments and the review of the fair value of the acquired assets of Mabel's cookie business.
With regard to EBITDA, it stood at BRL 914 million, up 17% compared to the 2022 adjusted EBITDA, which excludes the advantageous purchase of Mabel with a margin of 8.1%. Excluding nonrecurring effects of BRL 45.8 million in other revenues in 2023, adjusted EBITDA for the year reached BRL 868.2 million with a margin of 7.7%.
Turning now to the quarter's indicators. Net revenue was BRL 2.7 billion, an increase of approximately 7%. Cost of goods sold grew by 4%, mainly due to Brazil's high turnover in grains and sugar and also the high value of cookies. As a result, our gross profit amounted to BRL 573 million with a margin of 21% in the quarter.
SG&A as a percentage of net revenue amounted to 14%, down 2.1 percentage points in relation to the fourth quarter of '22. This reduction was due to the fall in G&A Brazil, mainly as a result of the reduction in personnel expenses, energy and other nonrecurring effects or reverses of provisions for legal expenses.
It's also worth noting that we had some nonrecurring effects in G&A, which ended up taking the indicator a little lower than usual, such as the reversal of some provisions in personnel, among other effects. In other operating income and expenses, we totaled a positive BRL 3.7 million in the quarter, mainly thanks to the recognition of social security credits from lawsuits and a provision for ICMS losses in Pernambuco.
As for EBITDA, it stood at BRL 254 million, an increase of 62% when compared to EBITDA in the fourth quarter of '22, with a margin of 9.5%. Now moving on to debt. The company's net debt stood at BRL 2.7 billion, with net debt to EBITDA for the last 12 months, up 2.9x in the quarter. It is worth noting that the seasonality of working capital is relevant throughout the quarters, more specifically in rice.
Therefore, the first quarters of the year usually see higher cash consumption while the fourth quarter usually sees a release in working capital, and consequently, an improvement in leverage. It's also worth noting that in December 2023, the company concluded its 13th issue of debentures backed by rural credit notes or CRA. The issue consists of simple debentures in 3 series totaling BRL 650 million.
CapEx amounted to BRL 86 million in the quarter and BRL 290 million in 2023. In Brazil, the main CapEx investments related to the expansion of pasta and coffee production capacity, in line with the company's strategy of expanding high-value categories. In the International segment, we acquired new equipment and expanded storage capacity in Peru and Chile. Tucapel began modernizing and transferring the Santiago plant.
Finally, we entered into a partnership with a new rating agency, Moody's, which gave us a stable AA+ rating, reflecting the company's solid financial stability. With regards to ESG, we are consistently pursuing the actions carried out by the company with our most recent highlight being the entry into the ISE B3. Last year, we carried out a cross-sectional assessment of initiatives, processes and procedures carried out at the company, which directly or indirectly impacted the scores in questionnaires and market ratings. The assessment resulted in the plan with several actions, one of the results of which was the news that Camil was then included in the ISE in the new portfolio, which has been affected since January 2, 2024.
This move reinforces the company's commitment to sustainable business development, the planning and the creation of shared value. If you will like more details about these actions, I invite you all to access our sustainability report and contact our IR and ESG team in case of any questions or suggestions.
To conclude, as Luciano has already pointed out, we are working hard to boost our efficiency and gradually grow in scale and profitability. We are confident that we are on the right track to take the company to a new level of scale and profitability. I would also like to take this opportunity to emphasize my message reinforcing Luciano's that we are very saddened by the situation in Rio Grande do Sul, and we offer our solidarity and support to the victims, discussing and mapping the impact on a daily basis and providing the necessary support to our people and communities.
We will be available for Q&A in case you have any questions. Thank you all.
Thank you. And before going to the Q&A, I would like to turn the floor over to Mr. Quartiero. You may proceed, sir.
Good morning, everyone. I would like to start our Q&A session with a very brief introduction. Still reinstating our profound site sadness and solidarity with the events of Rio Grande do Sul. I don't think I must repeat that because I think we've all been seeing the latest events.
Directly speaking, there were very few employees impacted by the tragedy. But we are giving full support to them and their families. The company also made one first donation of almost 8,000 basic staples of products from all of our categories, and this will be distributed together with 4 clients we have in Rio Grande do Sul.
These major staples are being prepared in our unit in Santa Catarina, so that it can reach the most affected regions in the north of the state. We have some customers outside Rio Grande do Sul that are also coming to us because they want to support us to help us increase the volume of donations. Therefore, we see a lot of solidarity among our customers.
I previously said that our plants in Rio Grande do Sul were not affected, but we still encounter logistic difficulties in the state. We have approximately 80 points that have been either partially or fully interrupted therefore, logistics has been a major challenge. Impacts in the rice harvest. I mean before this event 80% of the harvest had been -- of the season had been harvested. This is in Rio Grande do Sul, but in the region, in the central part of the state where there was the heaviest concentration of rains, only 60% of the season have been harvested.
And another area that was greatly affected. I mean we had already harvested 80% of the crop. Therefore, the preliminary analysis of the first estimates about the impact of our rice production there will lead for a lower yield this year. I mean the season had already posted lower yield.
And yesterday, the government published a temporary measure authorizing Conab to operate in the market. Therefore, we still have to see how Conab will act to reduce impact on prices. So in summary, and now moving on to Q&A, the company is working very diligently in the region. We are trying to keep the state and the rest of the country well supplied. In the first 10 days, we've seen an increase in demand, very similar to what was in the beginning of the pandemic.
I mean final consumers are trying to start to buy and increase their stocks. The company is distributing our production reinstating all of the logistics difficulties that we are encountering. But this is the way that we think that we can operate with our customers by distributing everything throughout the country in an attempt to minimize the impacts.
So now we'll open for Q&A, and we are certainly available to render any additional clarification, especially about what is happening in Rio Grande do Sul.
[Operator Instructions] The first question is from Gustavo Troyano from Itau BBA.
Luciano, I will now refer to this last topic you mentioned on Rio Grande do Sul. It's a very delicate situation and you already told us about what is happening in this next coming season. The question is whether you already talked about the possible impacts for next season. Whether you see a more permanent impact or something related to soil conditions or something that could impact the next crop season.
I know that planting hasn't started yet. But what is your preliminary view because this will help -- this would help us to understand the impacts for the next crop season. Still on the same topic. I would like to hear the impact of the price of rice in the gross margin of this quarter. I think there was a big expansion quarter-on-quarter. But looking at price prices in this quarter just ended. What is -- what will be the impact of rice prices in your gross margin?
Because going into your fiscal first quarter, I think prices changed a bit. So what will happen to gross margin? Because I know that rice prices resume to normal. So I just want to learn more about the reliance on the rice price going into the first quarter.
And the other question is for Flavio. Something that drew our attention was the reduction of taxes in the quarter. We noticed that there were some exclusions that helped you to give an important leap in the quarter. Can you elaborate on the reversals during the year and tell us about your view in terms of what should we expect in terms of having a more normalized tax quote going forward, please, in 2024.
Okay, Gustavo. Speaking about the impact in the current crop season. I think the first 10 days, everything is still very preliminary, but we are seeing a 15% impact on prices in this initial 10 days. And there has been an increase in logistic cost because we have to find alternative routes. This has put price -- put pressure on prices.
And when we compare prices starting in May, this is not the scenario March or April because you're asking about our first quarter. In May, we are beginning to see prices very similar to prices in the fourth quarter. Just to round up the figures, rice, when we look at the prices, it was about BRL 125 and prices came down in free harvesting was between BRL 95 and BRL 100. And now we are still seeing prices around BRL 125, BRL 120 with a trend towards further increases. But it's important to say that there is no risk of us experiencing lack of rice, but there will be some short term impact because of the demand that will not be fulfilled immediately.
Some clients are limiting their rice purchases just to allow all consumers to be able to buy it, right? Therefore, at the beginning, we see some probably lack of rice, but looking at the macro scenario for the year, there is no indication that there will be a scarcity of rice.
Your question about the impact in the coming season is still very soon to tell. But usually, in events that are not so catastrophic like this one, but where the cost of the preparation -- the cost of soil preparation is higher, but it's still too soon to tell. This is something that we will have to assess in the next 60 days. Therefore, it's too soon to tell you whether this will have an impact in terms of area or yield.
Flavio, could you say -- would you like to say anything?
Gustavo, now in regards to the tax issue with the company there, there was probably something extraordinary this quarter has to do with investment subsidies. I think in 2024, there were changes in the legislation after the approval of the law at the end of 2023. And then the scenario became clearer that in 2024, there was a major effect that we are having already in relation to higher cost in sales tax because of that non-exclusion of presumed credits and the reduction in the base that you used to calculate net income.
What we did this past quarter was the recognition of the balance that the company had in terms of presumed credits from previous periods that had not yet been recognized due to some internal management that we were carrying out. So once that was aligned, that determined what would be the regime prior. And going forward, we decided to recognize everything all at once so that we could be entitled to the credits.
Having said that, when we look forward, our tax rate going forward increases. It increases because the impossibility of using the presumed credit and the reduction of the base. Therefore, the calculations we are doing would be probably an average tax rate considering Brazil, the international segment, what we paid in terms of our own capital and all of the items that are part of the calculation of our net income that will be around 20% to 24%.
Next question from Thiago Duarte from BTG Pactual.
I would like to revisit part of Gustavo's previous question when he referred to the contribution of rice prices to your gross margin. And in fact, I would like you to also extend your answer to the other categories. What was really important and what contributed the most to the expansion of the margin.
You're saying that the sugar scenario remains challenging in terms of profitability. But it seems that there has been a very nice evolution in the high-value categories and in rice as well apparently. So maybe you can give me some more light about the different categories in Brazil. That will be nice. And still talking about the margin, and looking at your income statement, can you please tell me a little bit about your SG&A efforts. I think Flavio said something to that end. And you've mentioned some nonrecurring effects that contributed to reductions in SG&A.
But even if you clean that out now looking at our best efforts to purchase the nonrecurring effects, it seems like there was an important evolution in your operating leverage knowing that you are still working on efficiency gain programs. I would like you to tell us a bit more about the magnitude of the benefits that could be extended to the coming quarters, okay?
Now speaking about the contribution, certainly, the rice prices in the fourth quarter helped us in the consolidated contribution. But there is a second category that also helps us a lot, and that is the fish category. As when you have the highest volume of sales because of the length period.
Therefore, thinking about the 2 categories that boosted our margins, well, that was the new level of rice prices combined with fish. Sugar was pretty much in line of the previous quarters. And pasta continues to perform -- to outperform. It's above our expectation. So we continue to see growth and the performance remains very good. And then when we look at cookies and coffee. With cookies, the margin continues to grow and you have to remember that at first, we had a major challenge to do the turnaround when we acquired the company.
But as sales increase, we start diluting that and the margins increase. This process still remains as such. It happened throughout the first quarter. And the picture with coffee is very similar. And now speaking about these 2 topics, pasta and coffee, now in the next 30 days, our process with the capsules is already resolved, the coffee pods. So we are launching União coffee pods, and that should be in the market in the next 60 days. We are also launching a line of gourmet coffee to be launched very soon.
And in terms of pasta, we are launching Camil Pasta in Sao Paulo. We believe that, that should have great potential. The customers with whom we talked about that were very excited. And this brings a very good outlook going forward. Would you like to talk about G&A.
Well, thank you for the question. In fact, I think that throughout this past year, the company did some very profound work to review our expenses, mainly in Brazil. So excluding raw material, we took a second look at industrial costs, et cetera, freight, we try to find rooms for improvement in terms of costs and expenses. We already reap the benefits -- we are seeing the benefits of that.
We are putting a lot of efforts in this regard. And our internal goal is to at least try to neutralize inflation. How we can go through the year and at the same time, capture some of that inflation. And we gain inefficiencies then, and that's what we are trying to do in this 1, 2-year horizon. This work was done in Brazil. We were very pleased with the results. And we are now giving other steps to do the similar thing in the international segment. We started doing that in Uruguay because Uruguay is the largest international operation. They have greater scale, and therefore, I know that we will be able to reap more benefits there when compared to other operations that are smaller.
Next question from Tiago from Citi.
Luciano and Flavio I would like to review a few points with you. The first is revisiting the seasonality in rice. We understand that this last quarter of 2023, you usually have a smaller volume because people hold on, on their purchases, waiting for the season to reach a peak. So do you have any update to give us about the performance going forward, March and April?
Because I know that this year, the issue with Rio Grande do Sul probably complicated this dynamic a little bit. I just want to hear your update about it. The second point is to get more details on what Luciano just said about the Camil Pasta coming to Sao Paulo. I just want to understand how that is performing. We understand that this is a benefit that comes from the know-how acquired with Santa Amália.
And I recall that there was a contrary decision of rice going to Minas Gerais. And so I want you to elaborate more on that. These are my 2 points.
Thank you for your question. The point you mentioned like in the fourth quarter, we had lower sales volume in grains, especially rice that's historical because customers wait for the season and they wait for what usually happens because prices go down when we have a new crop season. So most customers reduced their inventory levels significantly until it comes a time for them to buy. Usually, this acceleration of sale usually takes place in March.
But this year, if you recall, the beginning of the year and the heavy impact of [indiscernible] last year that delayed rice planting. And as a consequence, the harvest season was also delayed. Harvest usually starts in the middle of February, and it goes until the end of March or early April. But harvesting started almost 30 days late. Therefore, that purchase volume lasted March. And at the end of April, when the peak reached -- when prices reached its peak, all customers started to buy a lot.
And that started in the second half of April. And at the end of April, there was that climate event in Rio Grande do Sul. So there is lack of supply that could affect the stores, reflecting what I said before, that tends to happen with greater intensity because of the lower volume of rice that our customers already had due to that process that happens every year when they delay their rice purchases.
When we look at the impact in the third quarter, we -- I mean, this is something that started happening in the second half of April. And as I was saying before, we have this enormous logistic challenge due to limitations in Rio Grande do Sul. Historically, our rice volume in the first quarter, it will be slightly lower in view of the impacts I mentioned before.
Now referring to Camil Pasta. The company studied that topic a lot and as part of our strategy to exploit the strength of the brands we have in different categories, there was -- 1 example was Cafe União, the fact that we revisited that.
To be honest, this is a new experience in terms of launching a new category in one of the original brands of the company because we've seen Camil most strongly as grains. But we talked a lot with our customers. And apparently -- I mean not apparently, but in general, the potential there is very strong. and the strength of the brand will help us to develop that category further in Sao Paulo.
At first, the company brought the Santa Amália brand to Sao Paulo, but the response was not as good as what the brand has in Mina Gerais, and that's why we decided to test another brand. As I was saying before, this is now going to customers until the end of the month. The product is in production. And we did the reverse, as you mentioned yourself, was to launch Santa Amália rice in Minas Gerais. This test was initiated a few months ago. We saw a good response.
I mean when it comes to Minas Gerais, we are making new investments because we want to have a packaging plant, the industrialization of rice in that state in order to have better tax benefits. This will be concluded in the next few months, and this will certainly help us to develop that rice brand in that state even more. This is one of the growth fronts within the brands and categories that the company is looking at right now.
Next question from Laura Hirata from Santander.
Before I start, I would like to express my solidarity to the employees in Rio Grande do Sul. Well, my question is about something that was mentioned during your Investor Day earlier this year, and this is in regards to the new categories. How is the integration of the brands, particularly in regards to logistics and sales strategy because these were points that you mentioned these were your objectives looking at this year.
And I would like to get a better understanding about your product portfolio. What segments within these new categories you still see room for further growth. And on the other hand, what segments you believe you would still need to optimize the portfolio going forward and whether this is something that is in your radar.
Laura, thank you for your question. Well, certainly, our focus for the year has been in the execution of all categories together. We are putting great focus in our go-to-market strategy. We want to understand the competitiveness of every category in every region of the country. This has been a constant learning. We have categories where we are very strong, and we have great competitiveness in other categories, not so much. So the company is exploiting these strengths.
Certainly, this has been our challenge in the past few months in the past 2, 3.5 years, and this is also the focus of the company for this year. As you mentioned, distribution we are revisiting the coverage of our distribution centers. We are rethinking about ways of optimizing that. The company has always focused on direct deliveries from our plants to our customers and the categories that have lower volumes and lower weight needs to have DCs in different regions.
The logistics scheme has been reviewed. But this is a slow work because it should be deployed in the coming quarters. So from Camil Day onwards, this is just the enhancement of this activity going forward. In terms of growing the new categories, the company is very much focused on the current categories. We see a lot of opportunities in the most recent categories in different regions.
So COFINS, we invested in the expansion of our plant. And we are now running at 50% to 55%. The focus is to take coffee and the new SKUs or the 250-gram pouch, and we will have vacuum of 500 grams. Therefore, we are very much focused on increasing the main coffee SKUs while at the same time, we want to increase our geographic coverage. We still see a great potential to be exploited. In terms of pasta, Camil launch in Sao Paulo. This brings about a huge potential. We expanded our pasta plan. So the commercial part of it is concluded.
Now what remains is just to focus on our sales. I thought that's where the company was born. This is where we have our best relationships I am really anxious to see this product appearing in supermarket shelves and to see the reaction. Cookies. We still have some idle capacity. Every quarter, we managed to capture growth. We still see a good avenue of growth to be captured in that category.
The focus is indeed in capturing all of these internal growth capacity in each category, synergies in sales execution, the using of the -- the use of the same sales rep. I mean working in all categories in our customers. We still have a lot of work to do, considering everything we have. The optimization of the portfolio, both for -- both regarding the launch of new products, like I said before, coffee pods, premium pasta in Sao Paulo and the reduction of items that are not performing or not reaching our expectations. This is a constant review process. I think this is what I can say about optimization. And I believe that I answered your question. Otherwise, feel free to ask a follow-up question.
Next question from Pedro Fonseca from XP.
My first question is we've been also monitoring the balance sheet of some retailers, and they have managed to extend their premium terms to suppliers. And they see a lot of room to expand Chairman payment terms going forward. We haven't seen that with Camil, especially given the relevance of Camil in their retailer shelves, we haven't seen that yet. So my first question is whether you are seeing some pressure in terms of receivables.
And we saw a small tightening of suppliers in the first quarter, if you could clarify that, that will be great. And my next question is about the company's view about the competitive sugar environment. We know that you do not speak about profitability per category, but maybe you could give me some color in qualitative terms. What you think we could envision in terms of sugar volumes for the year, particularly if you look at commodities, there was a significant drop in commodities compared to last year and whether we could see probably a more benign scenario in terms of sugar competition.
Thank you, Pedro, for your questions. In terms of increase in payment terms on the part of suppliers. This has been a major debate throughout last year. In a way, the company was able to maintain the terms given to mid- and large-sized customers. The company is also offering to smaller customers, a possible expansion of terms if they buy more things.
So throughout last year, we exploited the financial aspect as a way to increase synergies between the different categories. what we felt the most with our customers is that throughout the year, there was a reduction in inventories. So when in some customers -- when we can have a more detailed discussion, it was clear that they reduce the inventory days of our products.
And certainly, this has an impact on year 1 when this reduction occurs and then things go back to normal replacement. In an average inventory day from our clients, that's where we felt the most impact.
Now about suppliers. I think supply -- on the supplier side, there was nothing extraordinary. The change in the number of inventory days, it was mostly due to the purchasing mix of inputs that we were buying because the terms were different, and this is what changed that indicator. But in terms of management, there were no actions that will go on either side in terms of the reduction of payment terms. Now that was due to dynamics that happened throughout the quarter related to the mix of the inputs that were purchased.
Talking about sugar, I previously said that the fourth quarter was very much in line with previous quarters. The dynamic of our first quarter is just the same. We just completed a new volume for sugar experts, and this will take place throughout the second half of the year. In the first half, there was no sugar imports, but if price reaches the level of '19 and '20, that could be a sign of an improvement of this scenario.
Well, far from thinking that the topic is sold. But I think this is the third year where we see this segment with sugar margins above historical numbers -- historical margins. So thinking in terms that everything tends to be an average, maybe we are heading towards the end of the cycle, and this will improve our process and our profitability as well. I certainly think that prices between '19 and '20 are a dynamic -- are much better prices than prices of '23, '24 or even '27 as it happened once between the third and fourth quarters of last year. We are monitoring it very closely. The company looks at that very, very closely almost every day. So maybe we are coming to a moment when things are beginning to improve.
Next question is from Lucas Ferreira from JPMorgan.
About this regulation related to the tax reform about VAT, what will be the tax rate for each product, there is also the issue of the basic staple. How do you see the company's portfolio as a whole versus what is being done today. I mean, the tax burden accumulated in the chain. So how do you see the competitiveness of your portfolio today?
And my second question is about working capital. Flavio talked about seasonality. But you also talked a lot about the fish inventory last year that it would be diluted. My question is whether this inventory is now back to normal, whether you reached a point that you expected or whether it's still above average. So what should we expect going towards the first quarter? Because you said that the fish category was one of the highlights.
I just want to know whether this will still be the case in the first quarter.
Lucas, thank you for your questions. In terms of that reform, from our categories, only cookies and fish are currently the categories that will be taxed with the tax rate that the government is still analyzing whether it will be 26% or 27%. I think this has been the debate. All of the other categories will still have 0 tax rate, grain, sugar, pasta, I think -- and coffee.
The way things are now, the company's outlook is very good. You no longer have the topic of state legislation to charge ICMS. This will be a gain for everybody. But in our main categories, having a 0 tax rate, this will increase our competitiveness because you remove distortions and any impact from tax evasion. Obviously, 2032 is still far away. There will be a process of transition throughout that period. But the way things are now, the company is very optimistic.
Certainly, this brings some questions about major investments because this also changes this dynamic, as I mentioned in previous calls. The decision for new plants or the expansion process is certainly impacted by this new scenario. Throughout the next few years, there may be some setbacks, but certainly, the outlook the way the project is designed today is very good for the company.
Flavio, would you like to talk about working capital.
Now about working capital, the question related to the fish inventory. Yes, it is back to normal levels. And I think now our expectation going forward is just like we say we start the first quarter. We see the return of seasonality, which was expected.
Therefore, throughout the fourth quarter, there was an important working capital release, and this also helped us with our leverage indicator. Net debt allowed us to be below the limit of the financial covenants in terms of our debt position. And this was the result of a major effort by the company to manage receivables, to manage the inventory of raw material and finished good -- goods. So all of that was a combined effort that allowed us to reach that level.
And throughout this new quarter, we will see the return of seasonality, capital allocation due to acquisition of inputs. And this applies to grains, applies to fish where the movement of working capital allocation becomes more intense, both in Brazil and abroad. Looking at the entire year, right now, we don't see anything different than in previous years. There will be a process of capital allocation. And in the fourth quarter, we released it again.
If you allow me another very quick question. In the international front, do you see any improvement in the beginning of this new fiscal year?
In relation to the International segment, the topic of the rainfall, I mean, less severe than in Rio Grande do Sul but that brought an impact to the crop season in Paraguay, Argentina and Uruguay. Therefore, availability will be a bit lower in these geographies. When you look at Uruguay, the availability now because the season is concluded, it is slightly lower than the previous year. So it will be a similar year in terms of volumes. That's what we will see in Uruguay.
In Uruguay, as a reminder, there is seasonality of sales between quarters, not seasonality but variability between quarters. Last year, sales and shipments were mostly concentrated in the first 3 quarters and then the fourth quarter was weaker. So every year is unique. In this year, we're starting with a lower volume, but this can be recovered throughout the year. But if you look at the entire year in Uruguay, things are very similar.
In Peru, we are gradually recovering margins. In Chile, I think I mentioned during my presentation that we concluded the transfer of our plant. We will have some efficiencies that will be captured in the next 2 quarters. We had already mentioned that profitability had resumed historical levels. And so we will have all the changes in place. In Ecuador, things remained the same. So in the international landscape, we believe that this year will be very similar to the previous year, with slight improvements like the ones I mentioned.
[Operator Instructions] As there are no further questions, the Q&A session is now concluded. Thank you very much for joining us, and have a very good day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]