M Dias Branco SA Industria e Comercio de Alimentos
BOVESPA:MDIA3
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M Dias Branco SA Industria e Comercio de Alimentos
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Good morning, ladies and gentlemen. Welcome to the video conference of M. Dias Branco for the earnings in the third quarter of 2021.
Here, we have Mr. Gustavo Lopes Theodozio, who's the VP of Investment and Controllership; and Fábio Cefaly, the new Business Director and IR.
We would like to let you know that this event is being recorded. [Operator Instructions] And that's why the transmission result is going to be performed simultaneously on YouTube on the address.
This earnings call related to the prospects of the M. Dias Branco forecasts and targets operationally that are beliefs and assumptions of the Board of Directors and the company as well as information that are currently available. They involve risks, uncertainties and assumptions related to future events and they rely on circumstances that may or not occur. Investors may understand that overall economic conditions in the industry and other factors operationally may affect future performance at M. Dias Branco and lead to results that differ materially from those represented in the future considerations.
Now I would like to pass on the word over to Mr. Gustavo, who will begin the presentation. Please, Mr. Gustavo, you may begin your conference.
[Interpreted]
Thank you. Good morning, everyone, and welcome to our call. Before we enter the main highlights, I would like to start off presenting our team at M. Dias Branco. Thank you for your dedication, work and resilience at this moment that's more challenging. And what's most important, thank you for delivering the results in this quarter. Our team has been working tirelessly, and really deserves all of our acknowledgments.
Now as we enter a bit of the highlights here on Slide #3, we start off with our record of revenue. We've delivered net revenue of BRL 2.2 billion. And we continue to be firm in our delivery of the pipeline for innovation with a record in the quarter with the contribution of the cookies launch, which has more added value and this is an important guidance strategically.
We also continue to prospect new partnerships and increase our participation in e-commerce. We're going to highlight with Fábio, which of these new partnerships these are. We continue with our discipline when it comes to productivity and efficiency programs. We've reduced structurally the expenses with sales, administrative expenses that represent 16.6% sales and 3% on the net revenue for SG&A. Our EBITDA margin went back to double digits as we had mentioned, with many leverages that the company has been strongly focusing on to deliver. We've delivered in this quarter, 13.1% EBITDA margin, which is very relevant, and we go back to that point on our target margin between 15% and 20%. The EBITDA in 2021 and the generation of working capital contributed to the generation of 3x more than what was in the third quarter of last year. We had a net cash position of 0.1x EBITDA, and we reinforced our AAA rating.
And when it comes to sustainability, we have also reaffirmed our A rating for MSA, which is one of the most recognized in the assessment of the ESG indicators. The company continues to be recognized regionally and nationally for its performance and the strength of its brand. We were selected the biggest and best company in this category.
We are also top of mind in the Vitarella cream cracker category and also with the macaroni pasta brand with Adria. And for the fifth consecutive year, we were also highlight among the most transparent companies in the Brazil market, which is something that makes us very proud.
To complete this part here with the main highlights and pass it on to Fábio to provide some more details on the results.
I think we just launched a recent relevant event. We closed the deal for the Latinex, and this company has the Fit Food, Frontera, Smart, T&C and Tyrrell's brands. This represents that we are really moving ahead in our strategic plan as we have been communicating to all of you, in the sense of bringing in companies that add more value, bring in more margins, more profitability, which is the case of Latinex and that are also in line with this future healthy food segment and the health foods segment as well. So we'll give you some more details now with Fábio as we enter a bit more of each of these lines. And then I'll come back with Fábio for the Q&A session. Thank you very much.
Hello, Gustavo, and thank you for the introduction. Good morning, everyone. I hope you are all doing well.
I'm going to use this minute in the presentation to provide some details on the results. And I'm going to start off with the net revenue, as mentioned here in the introduction. This was a record in the quarter, BRL 2.2 billion. which represented a growth of 10% compared to the first quarter this year. When we observe the evolution of the first quarter of 2021 to the third quarter of 2021, it's clear that there was an evolution that was consistent and gradual in our net revenue comparing with the same quarter of last year, this growth was representing 7%. And it's important to also mention the growth versus the year of 2019, because this represents a pre-pandemic period.
So if we were to compare with the third quarter in 2019, our net revenue grew 40%.
Now let's move on to Slide 7 on the volume. The first highlight is the evolution throughout the year. We had a first quarter that was a bit more challenging, but we were able to recover this in the second quarter. And we were able to grow our volumes as well in the second to the third quarter. There was a drop of 18% when compared to the previous year, but it's important to remind you that this was a period with a huge demand, and it was quite a typical and temporary, which is related to all of the specific issues related to the pandemic, people that are working at home, they had the corona voucher and these were all factors that leveraged the demand in the third quarter of 2020.
But when we compare with the third quarter of 2019, there was a growth in volumes of 4%.
And as you move on to Slide 8. We've already talked about the net revenue and the volumes as we get into the average price. What we see in this bottom graph is the evolution positively and gradually and sequential evolution of our average price. That was BRL 3.6 per kilo, and we ended the third quarter of 2021 with BRL 4.8 per kilo. This is the evolution that is a result of some adjustments that were made throughout this period in the past 12 months and also all of our marketing efforts and innovation efforts to place some items that have more added value in our portfolio.
So here are some of the examples with products that were launched in the third quarter -- the fourth quarter of 2020 throughout 2021, such as this product over here, that you can see on the right side of the slide, which is a choco wafer from Piraquê brand, which has an average price of BRL 21.9 per kilo, which compares to the average price to M. Dias Branco of BRL 4.8 per kilo.
So this movement really contributes to what we have been mentioning, which is our main focus on having a strategy for growth with profitability. And within this strategy, it's important to have the launches of products that have more added value, increasing our average price and increasing our margins consequently.
So as we talk about innovation, where we have the launches of some cookies and the products launched in the past 24 months, which represented BRL 79 million in revenue, which is gross revenue in the third quarter of 2021, which was higher than the second quarter of 2021, the third quarter. And even if we go back some days, we may see an evolution that's quite positive in this indicator, which is very important to measure the effectiveness of our innovation.
Now as we move on to Slide 10 as we start comparing quarter-over-quarter, the third quarter against the second quarter, the first observation we have here is about the average price on the right side of the slide. You can notice that there was an increase in the average price in all of the categories at M. Dias. There was an increase in net revenue in all of the categories at M. Dias and our volumes grew and this limit in the category of pasta and [indiscernible]. But there was also an increase in cookies, flours, margarines and fat and grease and other categories as well. That had -- in other categories is a small step back of 2%.
But it is important to mention that there was a growth in revenue of 12% in the cookies category, above the total growth in M. Dias this category, where we have the biggest prices and the best margins. So this contributes positive to the recovery of our margins.
Now as we look at the evolution year-over-year, the third quarter of 2021 and third quarter of 2020, you can see our prices had a growth of 2 digits in all of the categories. The volumes took a setback with issues that are more specifically related to the pandemic in the third quarter, and there was a growth in the demand that was very significant, especially in the category of cookies, which grew double digits in revenue and had a growth that was above the total amount in M. Dias Branco.
As we move on to Slide 12, on the export. We had a slight step back in our revenue on the third quarter in 2020 to the third quarter of 2021. But when we look at the overall period in the long -- midterm, third quarter of 2019 and third quarter of 2021, we had a growth of 3 digits, 216%. So the slight drop in the annual comparison is mainly due to factors related to international freight, such as the scarcity of containers and greater cost than just commercial factors. Our growth strategy out of Brazil continues strong. We are in a very accelerated pace still, and we're opening up new businesses at every quarter when it comes to countries and products.
Now moving on to Slide 13, when we talk about the market share. First, on the left side, you can see cookies and on the right side, you can see pasta. M. Dias is still a leader in the market in both categories, and there was a setback in the market share in the volumes over the past 12 months for cookies and pasta.
The setback was related to the adjustments in prices that were made, which intended to recover our margins, and this actually did happen.
So moving on to the next slide, Slide 14. We can see that there was a growth in the annual comparison, but also in the quarterly comparison of the second quarter of 2020 (sic) [ 2021 ] to the third quarter of 2021. And you can see when you look at the North and Northeast region, and where we're more of a defensive strategy and also an attack strategy in the Midwest, Southeast and South with a growth of 5% and 6%. And exports also, as I mentioned, had a setback of 16% year-over-year and 6% quarter-over-quarter.
Now as we move on to Slide 15, I want to show you a bit of the transition of the dynamic of the revenue to the profitability dynamics. And what this slide shows is that with the recovery of the average price, BRL 3.6 in the last year and BRL 4.8 in the third quarter of 2021, recovery of the volumes throughout 2021. 356,000 tons were sold in the first quarter and 456,000 tons were sold in the third quarter. So our gross margins already had a recovery from 26.8% in the first quarter, all the way to 31.4% in the third quarter, in line with what we had mentioned in the past quarters, that would be the movement of readjusting prices, controlling expenses, controlling costs with the objective of the recovery of our margins.
Moving on to Slide 16. You can see that we continue to have this approach of reductions in our structural expenses. I'm starting off with the sales expenses, which is the fruit of all of the work that's been done throughout these 18 months where we were able to reduce structurally the expenses of sales. We've already talked about this quite a while in the other -- in the last call on the Multiplique program that was delivered throughout last year and also brought in just a few of the initiatives that were already discussed.
Commercially, we have the adjustment in the number of promoters, renegotiating the marketing contracts, many different logistical initiatives, diminishing in the amount of trips, improvement in the occupation of the vehicles, assessment of the productivity in the store houses and warehouses.
So a set of initiatives that really allowed for the structural reduction of these expenses. We ended the third quarter with 16.6% of the net revenue. And when we compare this to 2019, we had 21.4%, 20.8% and the first 9 months of 2021, 18.4%, and we ended finally this quarter with a level that was way below our historical levels.
Moving on to Slide 17. In the same sequence. We are now talking about our administrative expenses, and this reduction is a result of the same program, especially the program Multiplique that was performed last year with many different initiatives for administrative expenses, the organizational structure, outsourcing of the payroll, optimization as we hire general services, and we were able to take the administrative expenses to 3% of the net revenue, a level that is way lower than what was noticed in 2019 and also lower than what we noticed in the year of 2020.
Moving on to the next slide, we are talking about the 2 main commodities that we have in our productive process. So here wheat on the top part and in the bottom palm oil. And the green line shows you the prices in the market and the blue line shows you the prices at M. Dias Branco.
So we can notice the pathway of the increase in commodity prices, but M. Dias Branco through its inventory policy and hedge policy and supply chain management was able to operate with prices that were below the prices back in [indiscernible] market. And this is for wheat, but also for palm oil.
Moving on to Slide 19. As we talk about the EBITDA, the nominal EBITDA. First, on the left side of the slide, you can see the comparison of the third quarter of 2021 and the third (sic) [ second ] quarter of 2021, significant growth from BRL 167 million to BRL 286 million, which is resulting from an increase in volume, a big amount of volumes produced, which helped us dilute the fixed cost more, which was enough to offset the increase in wheat prices and palm oil prices.
On the right side of the slide, you can see the comparison of the third quarter of 2020 and the third quarter of 2021. And you can see a drop in the nominal EBITDA, but there is an important impact here also in smaller volumes, as I mentioned in the revenue chapter, and the increase of double digits in wheat and palm oil.
But what's important to highlight here is that in the EBITDA for the third quarter of 2020, there's a comparison basis that's a little more difficult because at that moment, we had the recognition of some tax credits that were above BRL 100 million. So the normalized EBITDA without the nonrecurring events would be a year-over-year growth.
Now moving on to Slide 20. We are showing you in a more consolidated way and a sequence of the nominal EBITDA and the EBITDA margin. The first observation I want to make is related to an improvement over 2021. We started the year with a margin of 3.2% and an EBITDA of BRL 47 million. We improved this in the second quarter, and we covered a double-digit margin in the third quarter, with a nominal EBITDA of BRL 286 million.
The comparison basis that's a little more difficult in the third quarter was already mentioned. But it's important to highlight also that the results of the third quarter in 2021 already overcame the results pre pandemic of the third quarter of 2019, which was a margin of 12% and a nominal EBITDA of BRL 188 million.
Moving on Slide 21 about the net income. Basically, the same conclusion here with the positive evolution throughout 2021, below the third quarter of 2020 and better than the third quarter of 2019.
Moving on here to the working capital issues. We mentioned also throughout the past quarter that this is a focus at M. Dias. All of the teams in the company, commercial teams, looking at the deadline to receive, the supply teams also and the issues related to suppliers, industry, logistics and other inventory issues as well, where we were able to have significant gains in working capital. I want to highlight the average term for payment, which was 16 days last year, and we ended this quarter with 37 days. So there was a positive evolution here quarter-over-quarter in the average term and year-over-year in the average term of the inventories. So moving on to Slide 23, the combination of the positive evolution of the EBITDA with the improvement in the working capital, led to cash generation of BRL 426 million in the third quarter of '21, which was 3x higher than the last year and a lot higher also than in the comparison of the third quarter of 2019.
Moving on to Slide 24. In the first 9 months of the year, we invested BRL 135 million with special highlights for manufacturing, logistics and technology, and it was a bit lower than the same period last year, 13% lower actually.
Moving on to Slide 25. Gustavo highlighted a bit of this in the introduction, but traditionally, we operate with a leverage rate that's pretty low. But due to the strong cash generation, we've inverted this from a net debt position to a cash -- net cash position in the third quarter of 2021, ending this period with a cash above debt level and BRL 103 million.
And for the fourth year consecutive year, our rating was restated by Fitch as AAA with stable perspective. So as we move on to Slide 26, and you remember that in the first quarter, we set an action plan for the year 2021. And this plan had 3 main initiatives. Let's search for growth in the sales volumes and 3 major initiatives that provide continuity to our productivity agenda and efficiencies.
So the objective in the next minutes is to provide some information on the progress of these 6 initiatives.
First is the Onda Verde. There are green ways to encourage the growth of the Piraquê brand that we consider to have the greatest added value and the cookies brand, and we continue to launch products that have major added value. This product here that I mentioned in the evolution of the average price with a price of BRL 21.9.
We continue to invest in marketing and other campaigns. We also highlight special like bar food, and we started selling Piraquê in Chile and Paraguay, strengthening even more of our business out of Brazil with our exports.
In Slide 28, we continued with the strategy of some partnership. In the beginning of this year, we started some partnerships with BEES, which is a channel that's B2B, and we are preparing now to have the rollout and expansion nationally of some of our brands in this channel.
And in September 2021, we started off sales at Zé Delivery, a B2C platform that works with end customers directly. And we are also starting off the sales through Amazon at this moment.
So this is a path to diversify our distribution even more and work in channels that have been demonstrating some accelerated growth. In the foreign market, we continue to launch products and here you can see some examples on the right side of the slide with some exclusive products for exports. And our innovation team works with our business in Brazil, but also with our business out of Brazil. And in this quarter, we launched 13 products that are dedicated exclusively to the external market.
And now as we move on to Slide 30, we started off with the 3 initiatives of productivity. We discontinued until September 2021, 122 SKUs, which had a low potential for growth and margins that were below our expectations. And this contributes to us having more production that's lighter, more focused, with less interruptions in our factories.
Moving on to the -- here, we see the main status of this program. We closed 2 of our 32 CDs. We renegotiated some commercial conditions with logistical operators. And we also had a plan to reduce the number of lines available for pasta and cookies, but this plan was suspended in regards to the recovery of the volume.
So finally, the last of the 6 initiatives is related to the organizational redesigning process. And so it's important to review our structure considering the market conditions and our strategy as a whole. We hired in the beginning of this year, a specialized consultancy for this kind of work, and this work happened throughout the last month. We performed some important adjustments in our structure. And now, we've already mapped out BRL 15 million in structural savings that were going to be captured.
This year, we have some costs related to this initiative, especially those related to changes that were made in our employee group.
Now moving on to Slide 33. When we talk about sustainability. Here, we had a slight increase in the consumption of energy and water compared to the previous year, but these are issues that are related exclusively to a lower level of production when compared to the third quarter in 2021 and the third quarter in 2020. So when we continue in sustainability in Slide 34. We restate the classification in the ESG rating at MSI. And we continued with our inventory for greenhouse gas emissions. This time, we included in our inventory Scope 3. So M. Dias already was able to map out emissions in Scope 1, 2 and 3. And now we are discussing this internally together with the Board and the -- which are going to be the targets for the mid and long term in the company for this indicator and some others as well.
And here, we'll provide some of the projects that are under progress, such as the Zero Landfill program that we already consider with all of our industrial units.
So we would like to thank you all for your time and attention. These were the main highlights in this quarter. And now we can go into the Q&A session.
Thank you very much, Fábio. We're going to begin our session with Q&A for investors and analysts. [Operator Instructions]
Just wait 1 minute where we collect all of the questions. Our first question comes from Isabella Simonato.
I have 2 questions. The first one is about costs. You had a gross margin that came higher than what everyone imagined. At the same time, we continue to see the commodities in reals going up absurdly. So what do you consider in the scenario of cost and profitability of course, combined to price policies for the next quarters? And so this dynamic of the gross margin would be the first question.
And the second question would be, as we talk about the market share, especially due to the focus you've had in profitability. Consequently, the share suffered a bit in the past 12 months. But would -- you've demonstrated a bit of your revenue performance, maybe from a perspective of market share, where you have areas of defense and areas of attack and how these have performed in the past quarters. I think that would be very interesting for us.
Thank you, Isabella. And well, as we talk about costs, actually, we -- they're not higher impact in reals only. We look at wheat, for example, it's still high in dollars as well. So we were already imagining some kind of control this year. But for 2022, we've already had some hedging positions and the prospects are not as good as we imagined. There's a big difference between markets, so if you were to consider production in Brazil and production in Argentina. Things are going very well. Numbers are even bigger than last year. This is great. However, when you take a look at the United States, Canada and Russia, really influenced by climate conditions and volumes are below what we have noticed. So this should continue to pressure prices upwards, especially in Russia, you have other restrictions. So the government had already charged exports with different fees and taxes. It's one of the main wheat exporters, Russia. And just recently, there's been an internal discussion also to limit volumes that are going to be exported. So besides charging additional taxes. There will also be an increase in fees on volumes as well. So prices are still pressured by -- even when they're in dollars. When you look at other commodities like palm oil, sugar and other items, we didn't -- don't see much of a control in these prices that we are expecting for this year. So these will still be quarters that are very challenging for us. However, we're very conscious of our strategy. We've been doing our homework in a very disciplined way, and we've been working tirelessly on many different fronts, just there are many different areas as well. And I don't want you to forget the innovation area as well.
So for example, we're already printing some pieces on 3D printers and reducing some of the costs as well. So we have many different efforts to try to minimize or offset the impact of these price increases. We understand that the consumer market cannot absorb all of this increase that we've noticed in the past 2 years. So from a cost perspective, it's really just about continuing to increase prices, choosing the mix with greater added value and also bringing more profitability. And there's a lot to be done with downsizing and as well as change some technologies for packages. So we can do this with greater speed. And we've already noted that all of the competitors are moving in this direction as well. So there's a lot of homework that needs to be done because the next quarters will continue to be very challenging in the year of 2021 is also proving to be a very challenging year, especially in Brazil with the elections and all of the situation.
When we take a look at the market share, we have been choosing profitability, but it's not like a binary option. So we continue to understand that the current levels with some impact on market share. We understand that there's still a leadership position that is quite comfortable with more than 1/3 in all the categories, which gives us some room to continue searching for this kind of profitability. But there's a limit to this. We also won't give up on market share, completely.
At some moment, of course, with some precise measures looking at some categories and regions, we're going to have to start giving up a bit of profitability at some moment to not lose too much market share, which is also very relevant for us. So you lose a bit and later on, it will be more difficult to recover. But this doesn't change our strategy. Now it's just about managing the details and region-by-region channel and category. There's some where we're going to be able to gain some more market share. Others there's less, but this has been our path.
So in the attack and defense area, maybe Fábio can comment on it.
Yes. There was not a material difference between the retraction in the share and the defense and attack regions. So we noticed that there was more of this search per category in the type of products and items that have lower added value, that are a bit more sensitive to price changes.
But from a regional perspective, nothing very significant.
[Operator Instructions]
Our next question comes from Gustavo Troyano.
My question is related to the competitive environment. I would like to know if you could share your perceptions on strategies for pricing and competition in regards to your price evolution throughout the third quarter and beginning of the fourth quarter. And I wanted to explore this a bit. If you've noticed the competition readjusting prices after the increases in prices that you've done in the second quarter? And if yes, do you consider that this transfer of the competition was enough to compensate or offset the increase in the industry? Or do you think there's still room for future price transfers?
I'll start off here and then Fábio can add on. Well, it really depends on some differences. When you look at the categories at M. Dias.
So overall, we look at cookies and competitors have been going in this direction. They've made maybe some more intense pricing movements, more geared towards downsizing of packaging, all of them have been moving in this direction, understanding that consumers don't have purchase power. And we consider that this is a category has moved in this direction better. So these competitors have been keeping up with it. But with flour or wheat, we haven't seen much of this. It's quite difficult to understand this, but we have a price difference that's very significant compared to our competitors, especially in the Northeast, where you have a big difference. And we understand that at the moment, they are going to have to push this a bit. When we look at this past the sector, we've also seen some different movements with downsizing and packaging. But of course, this is in a least important way or significant way than what we see with packages of cookies.
So for flour, our competitors haven't been pricing in the same size as M. Dias. For pasta, maybe a little more, but cookies everyone's kind of moving together in the same direction.
[Operator Instructions]
Our next question is from Mr. Thiago Duarte.
I would like to get the discussion back to market share in light of the increases in prices and the drop of corresponding volumes from 2 sides, 2 perspectives. First, from the perspective of the SKUs, you've mentioned that up until then you've already reduced the amount of SKUs in the portfolio by 122 units. And I wanted you to tell us how these SKUs can maybe explain a bit of the drop in the market share. And then the second point in this discussion would be how the increase in price has been very relevant in cookies, plus 20%; and pasta, plus 30% in the average price year-over-year. I would like it if you could maybe give us some level of detail on how the discussion of the share value. So we look at share volume. But since we're having this important change in the level of price, maybe the share value will eventually get back to a market share dynamic. That's a little different than what we're seeing in share volume. So these would be the 2 questions in regards to market share.
Now I wanted to also ask you something else. Is this improvement in the working capital that you've highlighted so well in the suppliers line? You've also mentioned, for example, that there has been an evolution in the risk which will maybe help explain a bit of this increase in the risk of the balance sheet of the suppliers? And what's the exchange for all of these when you increase this kind of risk, maybe you generate more interest expenses? Is this a correct interpretation? Or in which other line in your P&L would we imagine some kind of exchange in this sense?
And then finally, on this reduction structurally of the SG&A, especially with the sales expenses, once again, since the average prices haven't changed that much. I think that an important part of this dilution in the expenses has come with an average price and impact in the revenue. When we look at the unit aspect then we see your SG&A per ton sold or something similar to this. We can see that it still goes up about 10% to 11% year-over-year. And I wanted to ask you if we should imagine an increase in the SG&A along with the volumes when these begin to recover ever since they have been ever since the beginning of the year in a more consistent way just so we can understand how we should interpret this SG&A over the revenue when you consider the volumes.
Well, thank you, Thiago. Let me just talk to you about this a bit. And then Fábio can help the SKUs that were discontinued. I'd say that they are almost relevant for this drop in market share. The drop didn't come from here. So we have discontinued SKUs and low-pricing brands for reconcentrated sales and the energy of the commercial team in products that have more added value and brands that are more profitable. However, the numbers are still very small to interfere in the overall market share. The main drop came from the aggressive pricing than our competitors. I think that is what most impacts us, and we have this role. And we understand that as leaders of the main categories in Brazil, we must push this group ahead. So it is the role of the leadership to really leverage this issue with the pricing. So that said, with competitors not keeping up completely and some can't keep up in any way with the price switch. And we've been monitoring this so that in some moment, this loss is not that relevant. So this is what we have been doing. But as we talk about share volume a bit -- sorry, share value. The drop in volumes was not -- or the increase in price was not still enough to offset the drop in volume. So when you look at the share value, we also lose market share and with less than the volume, but we still lose because the drop in volumes was very significant. The issue with the additional risk is that you actually increased the term of the suppliers that you give them the option to discount the value they had to receive from M. Dias through a bank on the same day when they were discussing this -- where they have been discounting this.
So there are interests, but who pay this directly to the bank is the actual supplier. So we negotiate this new term, but we give them the option to continue to receive in that same period they had before as a transitional or temporary process for that they can use whenever necessary, with, of course, costs paid by them. So this would be the model, and we placed it at the availability with some banks.
So the fourth point was about SG&A, right?
Yes.
About the SG&A, Thiago, the numbers you mentioned for growth year-over-year, and that's close to about 10% when you calculate the expenses and the volumes sold. The numbers we have here, our expectation for the next quarter is to maintain the SG&A level that were observed in the past 2 quarters. And this is because we still have some other initiatives that are going to be captured. We actually highlighted this, the BRL 50 million that are going to be captured throughout next year, and they are related to the process to redesign the structural process. Why not this year?
Well, because this year, we have all of the costs involved, especially related to expenses with employee contract terminations, because we had some people fired and dismissed. So the second point would be greater dilution of fixed expenses in the expenses with sales and administrative expenses with the recovery of the volumes. So when we take a look at the inflation in the expenses and initiatives that are still underway, and we seeing some very good visibility that the gains will be captured in the next year and that the recovery of the volumes, which is what's happening throughout this, year generates a greater dilution of the fixed expenses. This does give us the visibility for the maintenance of the current level on SG&A.
So Gustavo was also mentioning that volume is what's going to help to dilute the fixed costs more. But when you talk about maintenance, you're referring to the maintenance as a percentage of the net revenue. Is that it?
Yes, exactly.
[Operator Instructions]
Your next question comes from [ Mr. Victor Hermano ].
Congratulations on the results. I have 2 questions. The first one is about the net cash position you're in. I wanted to understand how we should consider the allocation capital when we think about 2022 and '23 with some possible acquisitions? And the second question would be about the ramp-up, if you could give us an update on Piraquê and what the expansion is in the new regions if you could maybe mention a bit of this and how the brand share is doing, that would be great.
Thank you, [ Victor ]. Thank you for your question. The net cash situation is a bit outdated because we actually talked about this on the slide with the third or fourth presentation we had the closing of Piraquê -- sorry, not Piraquê, Latinex, where we paid a closing of BRL 130 million, which changes our cash position a bit. So we've also made some anticipation in our strategy, what we consider these perspectives that we're looking at in the future. So we have a capacity for stocking up in about 4 months, and we've been operating with these levels of inventory plus the derivatives. So we should have a cash consumption a little greater compared -- due to the strategy for the procurement of raw material. So of course, we have a pipeline of M&A, which should consume a bit of cash in the next quarters.
So we have the third question now, [ Victor ], on Piraquê. It's important to mention that 100% integrated into our business. So the company and the brand are integrated and the company was already incorporated. So it's already ramped up in line with what was designed in our plans. We have a team that is 100% dedicated to Piraquê distribution with all of the marketing efforts and innovation that's really concentrated in the brand. And just to give you some numbers here, the brand is already present in over 10,000 POSs. The brand gained share in the Northeast, just -- brand from Rio de Janeiro, but it's also growing in other states and the Southeast. But when we connected this to our distribution and logistical structure also in the Northeast, there was an increase that was very accelerated with the correct pricing and margins that are very good.
So this is the brand that we have been choosing to place M. Dias in the new platforms for distribution, as mentioned in the presentation with BEES, Zé Delivery and Amazon, which is presenting satisfactory results from a perspective of growth and margins.
Since we do not have any other questions, the Q&A session is officially ended. I would like to now pass on the word once again to Mr. Gustavo so he can make his final remarks.
Well, I just want to thank you all for participating in our call. It's a pleasure to be with you at every quarter. And our IR team, myself, Fábio and everyone else. And our team is available as always.
Thank you very much, and see you next time.
The video conference for M. Dias Branco has officially ended. We want to thank you all for your participation, and have a great day.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]