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. Welcome to the third quarter 2022 video conference of M. Dias Branco. We have with us today, Gustavo Lopes Theodozio, Vice President of Investments & Controllership; and Fábio Cefaly, New Business and Investor Relations Officer. We'd like to inform you that this event is being recorded. [Operator Instructions].
After that, we will begin the question-and-answer session for analysts and investors. This transmission is also being realized simultaneously via YouTube at www.youtube.com/rimdias. We'd like to clarify that any statements that might be made during this teleconference relative to the perspectives of the business of M. Dias Branco, projections and operational goals and financial goals are beliefs and premises of the management of the company, as well as informations currently available. They involve risks and premises as they refer to future events and therefore, depends on circumstances, which may or may not occur. Investors should understand that general economic conditions, industry and other operational factors may affect the future performance of M. Dias Branco and bring -- lead to differences -- material differences in the results.
Now I'd like to pass it over to Gustavo, who will begin the presentation. Gustavo, please continue.
Good morning to everyone. Welcome to our presentation of the third quarter '22 results. Let's start with the third slide, Slide #3 with the highlights of the company. This shows the net revenue of the third quarter, which is another quarterly record. We closed the quarter with BRL 2.9 billion in net revenue. Another highlight is our average price of BRL 6.2 per kilo, which is important in the company. Accompanying our pricing model, this price has been growing. This is the fourth consecutive quarter of increased prices. So we have been able to price in constantly since the beginning of the pandemic and the Russian-Ukrainian war, and we continue in this trajectory.
The volume of sales were also superior to the same quarter of the previous year, 6% higher and also grew in relation to the previous quarter, second quarter '22 by 15%. We closed with 482,000 tonnes due to the increase in price of all the inflationary pressures, the volumes continue to be quite high. Our SG&A continue to be very well controlled as they have been overall of our history at 18.4% of our net revenue, a 1.2% reduction in relation to the third quarter of '21. Our EBITDA, BRL 333 million, being 16% growth in relation to the third quarter of '21.
Another important highlight was the acquisition of the company Las Acacias, a Uruguayan company, and we're going to talk about that a little bit as we go along. The reason why the acquisition and what this company means and the results, and in a few slides, we'll talk about that. We continue with the recognitions -- important recognition.
The Adria brand was named for the third consecutive year, top-of-mind brand in the Spaghetti and pasta area. M. Dias Branco was listed on the 100 most innovative companies in the IT area. We continue to be part of the [indiscernible] Index, which represents leaders -- women in leadership. And we had the good news recently 2 weeks ago that MSCI has upgraded our rating from A to AA, which shows our commitment with the ESG practices in a very important rhythm, which has been consolidating our journey, our ESD journey. Looking at Slide 5, just to remember you, I'm going to go into this theme of the Acacias, and then Fabio can continue with the presentation. I'll be back at the end for the Q&A session.
But in the Las Acacias, we had a growth plan here in Brazil and several avenues for growth here in Brazil. We also looked about the entrance into other categories, the acquisitions in that direction [indiscernible] and Jasmine and other categories such as granola and gluten. And now we've entered into the pillar that we've talked about quite a bit, which we hadn't done as yet, which is not yet, which is the internationalization. We started with exporting. We export to 40 countries -- more than 40 countries, an area that has grown greatly. But at some point in time, we understood that it was important to start a greenfield or even through an M&A to take better advantage of the competitive position -- to give us a more competitive position in those countries in which we operate. So whether due to local knowledge, question of tax law eventually and the closeness of a much loved brand by the local consumers.
And so that's what we've done with this recent acquisition of Acacias. The strategy -- the growth strategy is we're going to grow more and better in the right channels with a portfolio which is more adequate, the revenue management which is more adequate, and all of this supported by programs, productivity programs and efficiency programs and maintaining our expenses under control.
Looking at the Las Acacias' question, recent acquisition. The first outside of Brazil, it's a small acquisition, but very significant in a company which will mark this first step. It's a company which essentially in recent to the culture and the age, it's very much like MDS. It was founded in 1952 on the 12th of October, the last month. It's a company which is run by 2 brothers currently, one of whom will stay with us until December, which is more an industrial area and then will leave the company after that. He wasn't doing much in the company and the President of the company who will stay with us for 1 year with the possibility of renewing for an additional year.
Las Acacias is a brand for those who know the Uruguayan market, which they know it's a very relevant brand with a good store presence on the supermarket shelves. It's the principal brand with volume. It's the second brand similar to Las Acacias. And then you have Las Acacias, it's a factory and distribution center of Montevideo, the largest market in Uruguay. All of the company-owned trucks, 100% company-owned trucks and DC is also a company-owned. It's a company [indiscernible] very well adjusted, has an EBITDA margin of 14% for the last 3 years. So different from other companies that we have acquired, who with a large gap, scale up possibilities in our distribution center.
Here, it's a different thesis. It's a mature company with good margins. But as part of the M. Dias Branco family, it will leverage greatly both our profitability as well as our sales. Firstly, because it's a company which is focused on pastas. The brand has the capacity to bring along other lines of products, plus we have a relevant possibility with Bento Gonçalves factory. From Bento to their headquarters, it's only 800 kilometers.
So there is a synergy eventually with -- for our flowers and even cookies, which today Acacias does not produce. So the first acquisition naturally BRL 120 million in purchase price, and we followed the M. Dias Branco which is to look at pricing things with great conservative -- very conservatively, one step at a time without following our strategy. I spoke a lot about pasta, but pasta is heart of the company, but pasta represents almost 80% of their sales. They also work with different types of flowers, almost co-packaging.
It's -- they already processed and packaged by local mills, and they sell it under their brands. One of the first synergies that we see here is that we can have a reserve capacity, which is important. We inaugurated the medical service mill, a very modern mill and it went better with more than 50% of reserve capacity, and it could be a route for us to use this reserve capacity in medical service to have better prices and leverage the sales of flour with the best margins in Uruguay.
They have some types of rice. They have some condiments as well and oils. So it's a portfolio more diversified than M. Dias, but they operate in categories in which we do not operate, condiments and rice, but it does not produce and these are co-packaging, which imports or brings in from other countries, from Italy -- as far as Italy, from Brazil and other European countries, but it does produce -- the majority product that they produce is pasta in their production units. I want to pass it over to Fabio to talk a little bit about the results, the revenue market share expenses, our costs and our cash position. And after that, I'll be back for the question-and-answer session. Thank you. Fábio, go ahead.
Thank you, Gustavo. Good morning, everyone. I'm going to continue the presentation. Starting with the revenue and market share chapter. The principal highlight in our revenue, we had, at the same time, growth in volumes sold and growth of the average price, which in comparison to year-on-year comparison in between the third quarter '21 and the third quarter of '22 as well as in the quarter year -- half year by half year. This is both in volume as well as in average price. And then the accumulated for the year, the volumes have grown 1% and the average price 29% totalizing a record revenue, as Gustavo mentioned, of almost BRL 3 billion in terms of net revenue.
Looking at the details of our different categories. In the comparison year-on-year, third quarter '21 compared to third quarter '22, the principal highlight is the highlight -- increase of average price in every category, above 20% -- 29% for cookies, 28% for pasta, 25% for flowers margin, and fats 28%. And the other category, which is important to point out, from the standpoint -- strategic standpoint, this increased 49%. This increase has a direct relationship with the 2 acquisitions which we made here in Brazil, Latinex, which has now consolidated its results in November of '21 and Jasmine which started to be consolidated in September of '22.
These 2 companies have products which have a higher average price than the M. Dias average price. At the same time, we've had this -- with this increased price increase above 29%, the expansion of volumes in cookies, pasta, which are the principle categories as well as flour had growth as well. Margin in France had a slight fall off in the category of other projects had a large growth of volume due to the consolidation of these 2 acquisitions.
In the sequential comparison, third quarter '22 compared to second quarter '22, the category of biscuits -- of cookies and pasta, these 2 categories together had 75% of our sales. We had increase in volume in both categories, 2% in pasta and 3% in cookies. Average price of 2% in pasta and 3% in cookies with growth in volume of 11% in pasta and 16% in cookies. So it's a growth in revenue that's quite balanced between price and volume.
In flour, we had a growth in volume and revenue. And in margin and fats, we had stability in the average price and an expansion in volume of 23%. And in the category of others, growth average price as well as 21% growth in volume. Accumulated for the year, net revenue grew by 30%, 1% in volume and 29% in average price. Average price growing in every category and our volume growing in cookies, flours and in the other categories.
Innovations, our launches continue to contribute to the average price increase. We look at -- since the first half of -- first quarter of '21, launches with prices above the average of M. Dias, coming to 39 in the second quarter. And in this last quarter, a launch of 14, which to show that we have a series of launches to show us the strategic trajectory, which is being executed.
Looking at the question of the most recent acquisition, Jasmine which has an average price of BRL 19.8 per kilo was consolidated in September and let's say, next with a portfolio, very premium level with an average cost of BRL 24.8 per kilo. Other launches were happening already in the fourth quarter in the various brands of M. Dias. Here's a few examples. In Piraquê, premium crackers with an average price of BRL 19. Malted milk cookies which is already a success in sales, with an average price of BRL 20 a kilo. Tortinhas Crostata which is of Isabela brand with an average price of BRL 24. Adria brand lámen with a growth of 12.8, Isabela brand lámen BRL 12.8. So all of this trajectory, which has been built for several years with a connection -- total connection to our strategy has shown some examples, some concrete examples of those things, which have already happened and are still happening.
And we have a pipeline in this direction for the next quarters -- for the coming quarters. Growth has also been very balanced. The -- what we call, our defensive area, commercial area, which represents areas in the North and Northeast and the tech regions, which represent the Center-West, South and Southeast regions. In comparison year-on-year, we had a growth -- more -- a faster growth in the attack area, which is where we have the biggest opportunity for growth and gain of share. We maintained our investments in marketing as we commented every quarter on the different brands of M. Dias, but we have prioritized some brands, especially Vitarella, Adria, and Fortaleza, which is the leading brand in several states in the Northeast.
Going back to -- we started -- we returned to fairs outside of Brazil, principally outside of Brazil, Ceara, Eusébio, Super Mix and the future trends here in Brazil, which -- where we were principally with the brands of Latinex, in these brands which are more attached to the pharmacy channel.
A question on market share, the general vision is stabilization and recovery of market share. We present here on these graphs in the above area, the share of value; and in the lower part, market share volume. And the market share of value in cookies, we had an expansion year-on-year and quarter-on-quarter. In pasta, expansion year-on-year with a slight retraction quarter-on-quarter.
And in flour -- wheat flour, a trajectory of expansion of market share especially outside of the Northeast region. As Gustavo mentioned, several years ago, we inaugurated a mill -- flour mill in Bento Gonçalves and Rio Grande do Sul and this mill has been a platform for the growth of this category outside of the Northeast region. Measuring it in tonnes, we had a slight retraction in cookies year-on-year. Stability in sequence and in pastas, again, year-on-year, a slight retraction in relation to the previous quarter, and in flour, both in volume as well as in value.
Looking at expenses and costs, our first message is in relation to the 2 principal commodities. The red line represents the prices in the market, the spot price for wheat flour as well as palm oil, and this represents the average cost of our stock, the blue line. So up until July, were both commodities, we had a price of our stock below the market value. Remember that we always do hedging. So this period from January until July, we were consuming the positions which were protected.
And August and September, we saw in our results, the impact of the increase in prices which happened in January to June to July. That's why our cost was a little bit higher than the market price at that time. But it's important to point out that the price in the market is presenting also another tendency of fall off. So at some point in time, this tendency will be observed in the M. Dias numbers as well. The price of commodities brought us to a retraction of gross margin in comparison year-on-year. And in the quarter-on-quarter, we had a third quarter with a margin of 28.6%, an impact of this situation of the increase of commodities prices. And for the year, we have seen an expansion of gross margin of about 28.9% to 29.9%. On the other hand, SG&A is under control and continues under control. In the third quarter, we had SG&A of 18.4% due to net revenue with a reduction year-on-year and quarter-on-quarter and accumulated for the year of 21.6% to 19.7%.
This led us to expansion of EBITDA year-on-year of BRL 286 million to BRL 331 million and a slight falloff in nominal amounts and margin from the second quarter to the third quarter. So what was the factor that provoked this falloff of EBITDA? It was the high price of commodities, as I mentioned. And for the year-to-date, we have an expansion of EBITDA -- nominal EBITDA of 55% from 8.9% to 10.6%. So we've gone back to double-digit margins for the accumulated number for the year of 2021 -- compared to '21.
Net profit had showed a tendency close to the EBITDA, stability year-on-year with a slight fall quarter-on-quarter provoked by this increase in costs and expansion in nominal terms with the net margin stable at 6.3%. Going to the cash generation, debt and investments, I'm going to concentrate here the explanation of our cash position due to the leveraging. We left a leverage position of less than 1%, which is our -- we had more cash on hand than debt in the third quarter of '21 to a position of net debt, more debt than revenue than cash, 1.7x EBITDA in the third quarter of '22. What provoked this increase in leverage? Two factors: One, an extraordinary payment of JSCP in the first half of '22, almost BRL 600 million and the last 2 acquisitions in Brazil. Latinex in November of last year and Jasmine in the third quarter of '22. These are the principle factors that increased our leverage from negative 1% -- 1/10 or 1%. Remember that 1.7x EBITDA is a very comfortable level of leveraging.
And other factors here, such as investments and CapEx, especially in systems and manufacturing and others which we have principally increased our working capital in our stocks for the increase in the level of service, which is one of our priorities and also the results of the increased cost for commodities in terms of price per kilo, both for wheat as well as for palm oil. We are maintained for the fifth year in a row, AAA rating, which is issued by Fitch with a perspective, stable. The highest rating published by Fitch and a stable perspective. And the CapEx accumulated grew by 65%; and the quarter grew by 65% and accumulated for the year, 37.6%.
Two highlights. The beginning of the implementation of the SEC which should open up in the beginning of 2024 and adequation of our machines for the reduction in the size of our packaging and flow packaging for certain categories, certain SKUs in the cookie category. M. Dias 3 up until Friday, went up by 6% versus an evaluation of the index of 7% as of Friday close of business.
Looking at sustainability, remembering that since the beginning of this year, we started to publish our sustainability indicators, not organized in the 3 pillars of our strategy of sustainability which is care for the planet, believe in people and strengthen our partnerships. So this is available -- this report is available both in the presentation as well as in the results. And all of these have sustainability -- have stability in this quarter. So we will talk about water consumption, solid waste, losses in productive position, women in leadership is one of our priorities, frequency of accidents, seriousness of accidents and purchases from local suppliers.
Other events that happened in the last 3 months. The cleaning of beaches and mangrove swamps on the cleaning day, diversity programs, donation of food, training, health journey and compliance. The ESG agenda, which is on all of these items of sustainability, diversity, social questions, but also has a strong connection with compliance. So those were the highlights of our quarter. And so now I can pass it over for the session of questions and answers.
[Operator Instructions] Our first question comes from Thiago Duarte.
I wanted to ask 2 questions, if possible. First of all, which is focused on the question of volume. As you mentioned, we're very good during the quarter. And I wanted to understand about the following aspect. We see the good volumes. But on the other hand, we also see a market share in volume, which is either declining or stable when we look at the different windows. So I wanted to hear what you would say, why is that the case? Is that the industry, which is, in fact, general -- consumption in gen when we talk about cookies and pastas, which is very strong, very, very -- growing very quickly? Or is there some type of that the market share is measured by sellout and the volumes that you sell for sell-in or would there be some kind of a temporary lack of connection between the sell-out and sell-in numbers?
And if you can tell us about how the share will look going forward? What are the 2 hypotheses more reasonable for you? That's the first question. And the second question is a discussion that we've been having regarding your margins after recovery with the costs at the end of the line dropping, we have more structural difference. Do you -- you have been coming, you've been saying that -- you've been trying to make your EBITDA margin getting back to historical levels in the future. I wanted to know with this preamble, if you could comment a little bit on what are the differences between the company in terms of structural margins today compared to what it was in the past?
Why am I asking that? Because when we look, for instance, at the changes of channels, you've seen consistently a falloff in the retail area and other cash and carry type of situations. This channel, does it cause a small falloff in the gross margin even though it's helping a lot in the question of SG&A? I wanted to see how these 2 questions add up together to result in the margin which you consider to be balanced.
This is Fabio. I'm going to start with your first question, which was a question of market share. I think that you even touched on the principal elements that explain our market share numbers. It could be that there is some delay in the reading of the numbers. So we don't consider that. But another point, which I believe is even more concrete, the question of the reduction of the packaging. And as we commented -- now here, I'm talking about market share for volume talking -- volume market share. Since I looked in recent quarters, M. Dias went through this process a little bit after its competitors did due to the fact that we've had more factories, more brands and it's a very complex process.
So as we have done previously, we had an unfavorable impact on the market share later. We reduced the size of the packaging, you lose a bit of volume, either in kilos or tons, which winds up becoming reflected in the market share -- volume market share. However, we see that the market share value was a little bit better than the volume market share. So at some point in time, the share volume will happen to the value as well, value and volume was catch up.
The question which you also put up between sell-in and sellout, we do not see today any problem because we monitor the stocks in our clients, and we have a level which is quite a reasonable level of stock. You might remember that in 2018 and '19, we had a situation -- an unfavorable situation of coverage of stock, a very high level of stocks in the client, something which was corrected in the beginning of 2019, but it's not what we're seeing now. Today, we see stock levels in our clients, which are very adequate approximately 30 days of stock without volatility. It's quite stable in recent months. So summarizing, yes, there could be some delay in these numbers. The question of the size of the packaging is a fact that could explain part of the market share of value versus volume and the stocks in the clients are at a reasonable level.
Thiago, this is Gustavo. As far as your other question, answering your second question, talking about structurally, the company is always seeking profitability. I would say that the company is in a structural -- notorious structural moment. The tools which were implemented in recent years comparing to what we had, makes a huge difference. So evolution of the market, evolution of the trade with concept stores, with people looking at the -- have the correct mix, the price -- the correct price and the right position on the shelf, and focusing on the questions of added value -- value-added leaving for later the products with less value. These are questions which qualify better our portfolio, seeking this margin. The area of pricing, we had an infinity of prices. Today, we have a culture which is more reasonable for pricing. And we have -- we don't have that cannibalization between our channels.
And we now see -- have one more director of management who's got his feet in the area, Leonardo, the daily numbers for the managers as well as the volume plus the profitability, which is in everybody's mind. We think that when we look at the structure, the mindset of the company and the tools which were implemented over time, structurally, the company is much better prepared to capture these better margins going forward.
So I'm not afraid of airing, but unfortunately, with all the changes that we have made over these recent years and the implementation of these tools have not yet given us the effect that we expected or hoped for, basically due to this question on the pandemic, the war and so forth, which are covering the results, which we imagined to be able to capture basically because all of this has become a much more volatile market and much more challenging, every commodity has been going up. The exchange rate in Brazilian currency, it's difficult to have an increase in commodity prices and a devaluation of the real at the same time. So this has been a persistent problem. We have 10 months of war and 2 years of pandemic. And so we're in a very challenging situation, not only in Brazil. The result is still effectively very -- but I'm sure that structurally, we're much better prepared to capture and improve these margins -- much more challenging margins. Basically, it's that.
Next question is from Pedro Fonseca.
I'd like to make 2 questions. My first is if you could give us a little bit of an update of what you see in the way of consumption in the fourth quarter, where you have a consensual -- looking at more growth -- what you're seeing in the way of volume, but also in terms of price and how these 2 converse with each other with the graph that you showed, which is very interesting, the costs of the commodities prices. How do you see this competitive scenario with the fall in the price of wheat? And I think nobody has such a good hedge as you have, and how do you see the competition moving in this question of price? And how do you -- how does this look at your possibilities for readjusting prices? That's my question.
I'm going to answer that. Fabio, want to add in. We're going to continue going forward, doing well. We put -- I believe in the last call, we put a price list in August, it went into effect completely in October. It's very newly instituted. It could be that the volumes continue to grow. We're in the phase of analyzing certain markets due to the prices of our competitors, which has not yet come back to us and is affecting some categories. However, it's a normal movement in our view. It happens every time. Some work in the market for a certain time. We go in front with price and then we suffer, then leading this process of pricing and the competitors take a little longer to catch up.
So we're in the phase now of waiting a little bit, waiting for the appearance of these competitors to give you a more effective answer. However, in principle, looking at the volumes in general, no yellow lights have come on as yet. But I want to talk to Fabio about it. When you look at the market, the demand for cookies, pasta and flour, we see stability year-on-year, which is normal for these markets. These are very highly penetrated markets in Brazil. They are present in almost every house in Brazil, every household, and are really due to a perception of value, due to the readjustments which have been practiced by the majority of the players in these markets. So it's a scenario of demand, which is a good demand, strong demand, and we have a perspective, a positive perspective for the coming quarters.
Our next question comes from Rodrigo Almeida.
Two questions, more specific questions temporary about the current moment. At this point, first of all, understanding a few points of some financial effects this quarter, I think that in relation to the accounts for -- accounts which are reserved accounts. And I want to ask you about the nature of this effect on the cash flow in the quarter and the behavior of -- the working capital behavior and how we should be thinking about this going forward in relation to how we -- in the fourth quarter, scenario, the fourth quarter for stabilization of costs at our average price is low. How can we look at the working capital as we see in this quarter, it would be interesting?
The second question is related to exchange rates. If you could give us an idea, it would be very interesting for us to be able to model this. What do you see in the rate of dollar, the hedges that you've done in the company? What can we expect for exchange rates with the dollar in the coming months to have a cost basis beyond the data, which you already shared with us, which is already very interesting? That's all I have on my side.
Rodrigo, it's Gustavo here. In terms of hedge, we don't give too much guidance to not set the people in this commercial area from their pricing with their competitors. But up until December, we have an exchange rate hedge close to BRL 5. Going forward, I'd rather not give a clear answer and not give information to our competitors. As far as the financial questions, the increase of our net debt, I would say, that majority of this is a question of capital that could just move around. First is the distribution. Almost BRL 600 million, which was spent on acquisitions.
So the Jasmine brand as well as the JCP were the bigger offenders in our net debt. Since the company generated enough cash, it should have been replaced over the next few months. This gave us an increase in debt. That's what we're seeing here. And you see this effect, the debt is a little higher, of course, higher costs. And then Fabio can also -- can open up a little more for you. Exchange rate variation has an effect, looking at the hedges for palm oil. So sugar and other commodities in our accounts receivable.
But the principle track in working capital, we don't see more consumption, a relevant increase in the consumption. There was an important adjustment in the last quarter, which we've been talking about. We're investing a great deal in the level of services. We understand that there's lots of opportunities there. And so we contracted a supply chain director and we're doing some changes, including the minimum stock for each of our units. We're talking about products that are ready to sell. We increased our stocks a little bit. But looking forward, we see no provision of great consumption of the stock.
Our next question is from Victor [indiscernible].
Two questions. First is a quick question. I wanted to understand, especially in your market share in flours, it did a good recovery from the 5% that you were at in '21. And I wanted to understand that dynamic, what do you owe this recovering share, is it a question of price or what? If you can give us a little bit of that dynamic. The question after that is the pass-through of prices. When we look at it carefully, we see 34% year-on-year, which is quite robust. But my question is, do you think we still have space to increase prices? And so when we look at 2023, we believe that prices should continue at the same levels. That's from my side that we have.
Our share of flours is a sector that we've decided to look very closely under the microscope. We have 2 segments which is industrial flour, which is a B2B business. We sell to industries and bakeries. And in those cases, the margins were lower, but the flour coming from Mexico, our mills with all of this confusion, costs and exchange rates have their capacity -- the reserve capacity. So when you have reserve capacity, you don't lower your fixed costs. So we've taken some actions at the point of sale. It's not a question of price, but an execution so that we can advance in that sales of flour, I would say, execution at the point of sale.
And related to price, if we didn't have this inflation, our will would be not to add to the prices. But going forward, we have inflationary pressures. What we've seen is that we have placed this in a very tangible way, and we have advanced. We haven't given any big relevant specific problem. Things have been growing month-on-month, semester after semester. And we're pretty foreseeing one increase, onetime increase. I can talk about it -- right now, I can't talk about it too much, but it will depend on the scenario -- on the global scenario. But we should diminish a bit intensity of price increases in any event.
There is space, we understand that we can continue at least rebuilding our margins so that our costs -- we don't want to recover this to prices, I'm talking about our table. I'm talking about tables, our price lists, downsizing, promotional packaging, portfolio, but we have to find -- the company has to find alternatives to minimize the effects of these costs. If they continue to go up, we're going to continue on this trajectory of improvement of price overall.
What I can't say is that looking at this year, this last quarter, which was starting out in the fourth quarter and the quarter that you just ended, that prices have continued to rise because costs have gone -- so the costs have started to come down. We see lower price on commodities in this quarter. So we should have a better relationship, but the world is still quite -- with all these political questions. However, for now, we still see space for recovery, increase in costs and recovery of margins.
Our next question is from Gustavo Troyano.
I want you to explain the theme of market share volume versus value. Talk about the performance in the value, I wanted to understand if this justifies all of this performance of the share value above volume or if there's another factor related to the mix because the performance of value can be attributed only to mix. So I want to understand price and mix, so we can make some -- an analysis in terms of the expansion of Piraquê or in the tax zone or region comparing price increases compared to the downside? And that's the first question.
And the second one, I want you to explain a little bit more about pricing more related to the question of prices of our competitors and rational pricing of the industry, especially in the pasta and cookie areas, I wanted to understand that this market share value has gone up more than the industry? In this case, can that be attributed to a reduction of price of the competitors in these categories? And if you think that there's more space to do a downsizing in M. Dias? Do you think that your portfolio today is at the right size? Or if you see margin to be able to reduce and pass this price to this dynamic?
This is me again. Talking about the downsizing, it explains part of this. It doesn't explain everything, but explains part both in biscuits and cookies as well as in pasta. So the other question are the readjustments, which we saw in 2022 is that the majority of our competitors made adjustments -- price adjustments. However, since M. Dias took off first, this brought an unfavorable impact on our volume. However, it is an impact which has a temporary impact. That's why we see the behavior of market share value compared to market share volume.
The other question that you said of the mix also explains this. There's not just one explanation. It can be a mix of several factors. The fact that Piraquê is growing more than the other brands -- M. Dias brands is due to the behavior of the market -- the value market share rather than the volume market share. The market has a price, which is 60% or 70% above the average of the market in the cookie market. So the more this brand grows in the mix of M. Dias, the better is our average price and the better is our market -- our value market share compared to the volume market share. So it winds up being a mixture of these factors.
We prefer not to open it, which is the most -- which one is more important than the other. But it is possible to say the impacts that are similar between the two. The question you asked, there's more reduction in the size of packaging. Now this agenda is basically concluded in both categories as well as cookies as well as pasta, it's a process since we started to observe in the market in the last -- middle of last year, we did this. Shortly after that, I was looking at this -- the first question of the call. The fact that we have a lot of factories and more than 100 production lines and more than 20 brands, it was a process which brought us -- took longer for M. Dias.
However, it is now practically concluded. But it could be a little something here and there, but for cookies, the big -- the majority of this process is concluded. Another point that you asked about is if the competitor is lowering prices. No, we haven't seen that movement. Last year, we saw some competitors who did not increase their prices or didn't increase their prices enough to compensate the increase in prices. However, during 2022, we see the market following a trajectory which is very similar. Costs still high and the market had to make some readjustments. However, for M. Dias, the readjustment of prices is important? Yes, it's important. However, it's not the only lever to average -- to increase our average prices. There's price readjustments is the mix, work on our packaging, brand, our acquisitions, the launches, the average price went up due to all of these factors. I think that I hit all of your points. If anything is missing, please let me know.
No, that's good. Fábio, that's very clear. Thank you for your answers.
This question-and-answer session is now closed. We would like to pass the word over to Gustavo to make his final comments.
Thank you for the participation. Once again, Fabio, Rodrigo, Aline, Fernando, [indiscernible] we're always at your service if you know our day-to-day, and can contact us on our day today, continue to follow or speak with us any questions you might -- any other information that you might need, any doubts or questions result to these results, we're always at your service. Thank you very much. And I wish you all a good week.
The video conference for M. Dias Branco is now closed. We thank you all for your participation. Please have a good day.