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 conference call of M. Dias Branco for Q4 2020. We have with us Mr. Gustavo Lopes Theodozio, Vice President of Investments and Controllership; and Fábio Cefaly, New Business and Investor Relations Officer. We inform that this event is being recorded. [Operator Instructions] The audio is being also presented via the Internet at www.mdiasbranco.com.br/ir.
Before proceeding, we would like to say that any statements made during this conference call concerning the business perspectives of M. Dias Branco's projections, operational goals, financial goals are based on information available to the Board of the company and information available. They involve risks and uncertainties, and they refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions and other factors may affect the performance in the future of M. Dias Branco and lead to results that may differ materially from those expressed in these statements.
Now I'd like to pass the floor to Mr. Gustavo, who will begin the presentation. Sir, you may proceed.
Thank you. Well, good morning to all. Welcome to the conference call of M. Dias Branco with the earnings of Q4 2020. I hope you are all with your families well.
I'd like to begin this conference call recognizing the commitment and the effort of all the employees of M. Dias Branco who are working in our plants, in our flour mills to guarantee the delivery of our products with the right quality.
To talk about the closing of the year, it would be interesting to talk about the main points and key indicators in our strategy. As we said in other opportunities, we have a strategy of growth with profitability. We work in large commercial regions, including North, Northeast of Brazil, where we have 60% market share; area of Attack, South, Southeast, where we have a great opportunity of growth. The export market is another vector of growth, and exports are growing 30% a year since 2015. Finally, growth in supplementary categories and growth which is part of our strategy.
Later on, Fábio will show the details, but I would like to make some comments about our growth. M. Dias Branco with all its brands is present in 93% of Brazilian households versus 92% in 2019. We maintain market leadership in cookies and crackers and pastas. And we closed the year, as you can see in comparison with 2019 sales, and the Attack area in the south grew 20%. Exports grew 278%. We have the largest marketing campaign in the company's history, giving priority to our main brands, both national and regional. The brands that received investments had an increase in penetration in the households.
Now concerning productivity, in 2020, we had a great project to increase productivity, and we called it Project Multiply with 188 initiatives involving all the areas of the company. We built BRL 184 million -- we had BRL 184 million in recurring gains, equivalent to BRL 138 million in gains during the year. In this presentation, we will see some of these initiatives. Thus, everything that was under our control was studied. We worked on these projects, and we improved them. M. Dias Branco leaves 2020 even more robust as a company.
On the other hand, our results had -- were hard hit by external factors. We were affected by external factors, especially our costs. Also the depreciation of 33% of the real in relation to the U.S. dollar and the increase in price of commodities had an impact, especially in the last quarter. Different from what we saw in different years, the demand for cookies and crackers and pasta became very volatile in 2020 and especially in January and June and also a drop at the end of the year, making it difficult to recover [ more ] because of the devaluation of our currency, the real.
And in terms of the volatility of the U.S. currency, it's important to say that in June 2020, we approved a policy that allowed us to avoid an impact of BRL 25 million. In terms of cash, with all the volatility and uncertainties in 2020, we generated BRL 693 million in cash and working capital with a leverage of 0.4, measured by net debt EBITDA. For the third consecutive year, we received AAA rating from Fitch Ratings.
To conclude, I would like to also talk about the important events we had in ESG. So we began -- we are now part of the Corporate Sustainability Index and also programs of the United Nations.
Before passing the floor to Fábio, I would like to say that we are working very hard, taking all the necessary care to guarantee the safety of all our employees and also to send products to Brazil and also abroad. We are working hard in the south of Brazil in the Attack region, and we are always looking for gains in productivity and efficiency.
Thank you very much, and now Fábio will talk about the details, and then we will have the Q&A session.
Thank you, Gustavo. Good morning. Please see our slides, our presentation. As Gustavo talked about the highlights and strategy, we can go directly to Slide #5. Here, we observed we had a strong growth in sales in the year, both in the Defense area and also the Attack region. We grew here, the Attack region, south, southeast has the greatest opportunity to grow 20%. Here, you can see 2020 versus 2019. When we look at the quarter, we had a stability in total revenue with growth in the Attack area in the South and a small drop in the Defense area in the north of the country. Here, the highlights are the exports with 3-digit growth, both in the quarterly and yearly vision. Later on, we will give you more details about exports.
Now Slide #6, please. Here, we see -- here, we have a vision of the year. Growth of net revenue, 18%; volume sold, especially, we see here the growth in volume, 12%; and average price went up 6.1%. We observed in the main categories the double-digit growth in revenue, cookies, pasta, flour and bran, margarine and fat and in others. In flour and others -- and fat, we had a rise in price -- double-digit rise in price.
Now Slide #7. Before going into detail about the quarter, it's important to talk about demand. As Gustavo mentioned, 2020 was an atypical year, a lot of volatility in demand, a very strong demand in Q2 and in Q3. And in Q4 of the year, we see a drop in demand. Here, we show on this slide on the left, we see cookies and crackers. In October, November, December, this is information about sell-out. The market dropped 1.6%, 6.8%, 0.2%, so there was a drop in demand in this category, cookies and crackers, in these 3 months. We won share, share volume and we maintained stable the share value.
So in the pasta market on the right of the slide, you see that October had a growth, but there was a drop in the market in November and December. And we maintained practically stable share volume and share value. So what we understand is that there was a change in demand in terms of sales and clients being more cautious to make -- place orders and consumers, too, so a quarter that was more difficult in terms of volume.
Looking at the detail in this quarter, please let's go to Slide #8. Here, we see the result. Stability in revenue with an increase in average price in the 4 main categories. In crackers; pasta; flour and bran, we increased prices by 41%; margarine and fat, 22% price increase. But the offset was a strong drop in volumes, minus 10% in crackers, minus 9.9% in pasta. Flour also dropped. Margarine and fat also dropped. So what I just described drop in demand, production and demand. Here, we had a strong effect in terms of in Q4.
Moving #9. Here, we talk about innovation. What we saw during 2020 was a stronger contribution from the launches. Looking at Q4 as an example, cookies and crackers launched in the last 24 months contributed with BRL 55 million in the revenue of the quarter, an increase of 55%. So here, we see 2 examples of the launches. One is Vitarella on the right here. It's a cracker. And at the bottom, some items from Piraquê, launches from Piraquê. These are traditional crackers. They are in the portfolio. We put a layer of chocolate, and the item has been a success in the market and also in all the regions where it is present.
Now Slide #10. Here, we will talk about marketing. We have the largest marketing campaign in the history of the company in 2020, especially in the second semester, focusing on our priority brands, Piraquê, Vitarella, Adria, Fortaleza, Richester and Isabela, and focusing on their value proposal in their categories, especially Piraquê in biscuits. Vitarella is a multi-category brand in pasta crackers, cream crackers; Adria, pasta. And we saw positive results, very positive result of this strategy, and we saw that all the brands had an increase in penetration, in home penetration. This is measured by census, so home penetration increased in all these brands of the campaign.
So Vitarella, for example, already had 44.6% penetration in users in Brazil to 45.4%. Piraquê, which is one of our priorities in terms of growth, a brand with high added value, went from 22.8% to 24.8% penetration. The same trend in Adria, Fortaleza, Richester, Isabela. This is an important initiative, even in a difficult year, with the second semester, even more difficult. This is a long-term strategy to strengthen our brands and to give them conditions to be stronger and stronger.
Now Slide #11. Here, we see the mix of sales channels, mix revenue. In the year, we had an increase in participation in distributors. Here, you see this in the middle of the slide, from 5% to 7% of sales in 2020. Some channels lost participation in our revenue, but we'd like to mention there was growth in revenue in all the channels, some more than others. For example, distributors, and this is part of our strategy, especially in the Attack region in the south, with [indiscernible] distribution.
What we show is the following on Slide 12 now. During 2020, we added 37 new distributors in our network. And highlight is for the Attack region, South, Southeast, Midwest. We have from 14 distributors to 42 distributors, so this helped us to grow in this Attack region.
Slide 13 on Piraquê. It's important to highlight, Piraquê is a brand that was acquired in 2018. For the category biscuits had a growth of 13% when comparing 2020 with 2019, and it is the brand with the greatest added value in biscuits. Some important points, market share of volume, this is total Brazil, it went from 3.6% to 4.1%. This gain share value also grew and home penetration in biscuits, 20.6% to 23.4%. So these are signs, important signs, showing that this high added value brand is getting stronger in our distribution and becoming more and more important in all the country.
Now Slide 14. Let's talk about e-commerce. We began to work in e-commerce in 2020. Specifically, as of the month of April, during the year, we had BRL 10.9 million in revenue. Sales grew during 2020. Main categories, cookies and pasta. And main brands, Piraquê and Adria are the outstanding brands with the greatest value-added brands. You can see that we are distributing our items through the main e-commerce platforms.
Now Slide 15. Here, we see market share. There was an expansion of market share between Q4 '19 and Q4 '20. So we closed the year with a higher share than we began with, with a higher market share. We are leaders with 33.5% in biscuits and 32.4% in pasta. We are leaders in Brazil.
Slide 16, exports. There was a very accelerated growth in exports due to all the efforts, strategy with the program designed since 2015 with a long-term vision. We grew 10x when you compare BRL 23 million in 2015 with BRL 235 million in 2020. We captured opportunities in wheat, pasta, biscuits, too, flour. Strong growth of sales in -- for some clients in the U.S., strong growth in private-label sales in the U.S. So we sell our brands, Piraquê and Vitarella, but we also produce items that are private label for some retailers in the U.S. We continue developing exclusive products for -- in exports. In the past, we talked about margarine to Africa. We have some other examples, flour, also crackers. All our portfolio is now better adapted to the export market. So our commercial structure, we reinforced. We have the first team dedicated outside Brazil with a sales director for Uruguay.
So here, we closed revenue. Now let's talk about EBITDA, talking about profitability. So it's important to go into detail some points that were mentioned by Gustavo, the Multiply Project. This is a project to capture efficiency and productivity. It began and finished in 2020, 188 initiatives focused in all the areas of the company with the involvement of the management council and Board of Directors to close follow-up. During 2020, we recognized recurring gains of BRL 184 million, which began to be captured in the beginning of the second semester, and they were in the result as of the second semester. And annualized gains here, we got to BRL 438 million. As we mentioned in the last call, we closed the year with this capture.
Slide 18, please. Here, we can see some examples of these initiatives. So beginning on the left, we will see what was captured in 2020. So annualized values. So first example, substitution of inputs and approval of new suppliers. For example, the suppliers of scents, aromas, a capture of BRL 10 million in 2020, BRL 12 million annualized. This was one of the first initiatives that we captured with the difference between -- you can see the difference between this -- and yes.
The second, transfer of the production of vegetable shortening from Piraquê to GME, which is our unit in Fortaleza, Ceará in the north of the country. So BRL 9.5 million in 2020; annualized, BRL 13 million; another BRL 10 million in 2020.
The logistics network increased. We increased the number of clients with direct service from plants and with a reduction of stopping points in distribution centers. You can see these 188 initiatives that had in the Multiply project.
On the right, BRL 16 million in logistics, adjusting the fleet profile and the itinerary. So we adapted the trucks logistics to the needs.
BRL 6 million, here, many initiatives like optimization; reduction and scale gains in general expenses, health plans, transportation, cafeterias, meal/transport tickets, operator of trade marketing and consolidation of contracts, light fleet and cleaning.
And the last example, BRL 2 million in 2020; BRL 8 million, annualized. Optimization of the organizational structure. One example here, we unified the industrial structure, both in terms of leadership and operational. So 188 initiatives and more than BRL 400 million annualized in gains.
Now Slide 19. Here, we will highlight -- this is a very important slide. I would like to talk about the recurring effects and nonrecurring effects, EBITDA, things that were under our control and things that were not.
Beginning on the left. Here, we look at the year from EBITDA of BRL 772 million in 2019 to here, 2020. Here, this is a BRL 974 million EBITDA 2020. Here we had an increase in price and increase in volume and also the exchange rate effect. There was a positive contribution of BRL 422 million as a total of BRL 1,194 million, plus BRL 184 million from the Multiply Program, a subtotal of BRL 1.3 billion.
We had a very strong effect from the exchange rate on results, BRL 688 million due to the devaluation of more than 30% of the Brazilian currency in relation to the dollar, BRL 16 million with the hedge policy, which began to be executed in July with a subtotal of BRL 706 million.
So what do we see here? Things that were under our control improved the company, grew the company, captured recurring gains with the efficiency and productivity program. But we lost BRL 688 million due to the exchange rate.
Here, nonrecurring, BRL 340 million.
On the left, tax credits that we have under the umbrella of the Multiply Program. So basically here, we're talking about tax points, nonrecurring expenses with COVID and restructuring expenses and integration of Piraquê.
And the same reasoning we have on the right about the quarter, so Q4 '19, Q4 '20. So the first line has a positive effect. And in the quarter, negative. Why? We had the increase in the price of commodities in U.S. dollars, especially palm oil, and also the drop in volumes. We captured here BRL 98 million with the Multiply Program, exchange rate negative impact by BRL 198 million. And we mitigated BRL 6 million with the hedge policy. Here, nonrecurring, BRL 146 million, tax, tax issues and expenses, nonrecurring expenses with COVID and the integration of Piraquê. So we spent more time because this shows what is under our control, what is not.
Slide #20. Here, we present the impact on the costs. The increase in cost of palm oil, wheat and flour costs. On the top part, we see -- the first graph shows that third-party vegetable shortening went from 6.3% to 10% in cost. Flour also went up from 30.6% to 33.1%. This impacts margin, EBITDA margin. And at the bottom, we see the consolidated effect during the year. So fat shortening, here, we see from '19 to '20 and wheat 30.6% to 32.9%, the cost. So the impact was harder in the second semester.
Slide #21. This is to illustrate the strong impact of the exchange rate, the devaluation of the Brazilian currency. And at the bottom, we see the evolution of the price of wheat in U.S. dollars. The blue line shows the market; in orange, M. Dias Branco. We see that we were more efficient than the market in Q4 '19, Q4 '20. We had a cost that was lower than the spot price, but the price grew. And the market had an increase of 12.5% as we can see.
Slide 22, same exchange rate. Here, we see that, at the bottom, palm oil, we see that it grew in the quarter and in the year, 24% higher in the year and 19.8% in the year. 24% in Q4 '20 versus Q4 '19. Here, we see a growing cost having an impact on results.
Now Slide 23, hedge policy. We launched -- we approved this in the council in July, and we began these 3 types. We have foreign exchange hedge, protection of the cash flow and foreign currency; commodity hedge; and debt hedge. On the right, we see that the foreign exchange hedge, we had a position with protection, BRL 169 million, equivalent to 72% of our exposure in the first semester in foreign currency. The debt, BRL 856 million, totally protected by a swap. And in terms of the foreign exchange, in terms of the CDI swap versus CDI, BRL 24 million cash.
Net debt dropped from the end of 2019 to 2020 from BRL 600 million to BRL 350.7 million. Leverage dropped from 0.8 to 0.4, and Fitch Ratings now considers us AAA, triple A.
Slide 25, net profit. The explanation is very similar to EBITDA growth of 37% of net profit in a very difficult year. So EBITDA margin grew and a drop on the right between Q4 '20 and Q4 '19, a drop of 12%; and net profit, 21%.
Slide 26, talking about our programs, Investor Relations. Closing share value, the highlights, the growing number of individual investors. In 2019, we had 57,000. In '20, strong evolution after 2015. In 2015, we had almost 2,000 investors. We have a repurchase program. And we changed the dividend policy with more frequent -- more frequency of payments, payout of 60%. And we were more active in digital medias with lives during the year.
Slide 27, an important highlight concerning the dividends, once again, the policy for 2021. We increased the number of payments and an important highlight, 4 fixed payments during the year. BRL 0.05, plus 1 payment for the results of the previous year. Minimum payout, 60%. Here at the bottom, we have the schedule that is defined for 2021, the 4 fixed payments and the payment for last year's results.
Distribution for shareholders increased a lot in 2020. Here, dividends, BRL 0.25 to BRL 0.46, dividends.
Slide 28. Our CapEx, there was a drop, both in the quarter and in the full year 2020. From the beginning of the pandemic, we had some difficulties. We decreased investments, so we closed the year with a reserve that is sufficient for growth.
Slide 29. Here, in 2020, BRL 90 million of working capital, reduction of 5 days in the financial cycle. Here we see days payable outstanding, 12 days; days of sales, 9 days; and especially due to the increases in the cost of palm oil and wheat, average storage time, 15 days. We renegotiated prices with suppliers, vendors. We paid close attention to cash flow.
And in -- we issued the first issue of CRAs by M. Dias Branco settlement on March 24, 2021, BRL 811.6 million total captured here. We see maturity, 7 years; rate, 3.79%.
So we maintained our partnerships. We are investing in start-ups. Here, we have start-ups working in healthiness. We made the second investment in 2020 with very promising results, especially in e-commerce.
In terms of sustainability, Gustavo already mentioned the highlights. Here, we see also indicators, those that had a positive evolution, 9.9% less energy, 5.1% less water consumption. So these are important points during 2020.
And to conclude, in a very difficult year, we won awards, Slide 33. So we see the awards here that we won: Isto É Dinheiro, Folha award, Transparency Trophy, Abrasca Award. We were recognized also due to our relationship with start-ups.
Well, we'd like to close the presentation. Now we can begin the Q&A session.
[Operator Instructions] Our first question comes from Leandro Fontanesi from Bradesco.
Well, as you showed on the slide, the Multiply program, the gains in efficiency, and you look at SG&A, excluding nonrecurring effects, it went up. So what caused this increase in costs, which were higher than the gains in efficiency in the Multiply program?
Second factor that you mentioned, demand and also -- and you had a drop in demand. But when we look at elasticity, we see that it's well above. I'd like to understand, are these temporary effects?
Gustavo, may I begin?
Okay, Fábio.
The first question concerning SG&A, you must be talking about the Q4. We had a -- we had revenue stable with some increases in payroll increases, nothing atypical, nothing new, nothing that is nonrecurring relevant in Q4. These are payroll increases. Could you please repeat the second question?
The volumes. I asked a question about the volumes. There's a significant drop in volumes. You mentioned also the reasons the price increased. When we look at elasticity, price increase and drop in value, elasticity is much higher than historically. And do you have any plans to compensate this in the next quarters with lower drops in volume?
Okay. So talking about Q4, what did we see during the year? It was an atypical year with volatility in demand. In Q2, Q3, we had a strong demand, consumers increasing their inventory at home. Also, the government aid programs helped a lot, especially in the North and Northeast. And cookies and pasta grew 10%. Some categories like pasta, our capacity usage went to 90%, especially in Q2.
And at the same time, we had a strong rise in costs. The increase in the palm oil and wheat, this has created an atypical scenario. Also, the exchange rate went up, increasing the price of commodities. The sector, I'll add, we had more cash due to higher volumes.
Now the scenario we saw in Q4 was different. So why? We began to see a drop in government aid programs during COVID-19, clients more cautious in terms of inventory. Also, consumers, more cautious, worried with unemployment and a stronger rise in costs.
If you compare with Q4 '19, exchange rate went up 33%. Palm oil in U.S. dollars went up 24%. And this set made us change our perspectives for the next few months. We had anticipated normalization, but this was all in the -- and in the end of 2020.
With the need, we had to make price adjustments to recover margins. When we increased prices, especially in Q4, prices went up, but with a drop in demand, clients being cautious, consumers being cautious and some competitors that did not increase prices, there was this effect of elasticity that you mentioned, which is atypical. Our prices went up 2 digits, and volumes dropped 2 digits. We had a double-digit drop in volumes and a double-digit increase in prices. So there was a drop in consumption. So in Q4, we saw a change in trends. So while in Q2, Q3, consumption went up, in Q4, due to these factors mentioned, consumption dropped. But the scenario asked for price increases to recover margins, so we could begin 2021 with average prices that would be more adequate, especially due to the exchange rate. Gustavo, if you wish to add any points.
Yes. I think it's important to comment, looking forward, the summary is we had to -- a moment of -- a lot of uncertainty. Vaccination in Brazil is a little slow, many uncertainties in relation to government aid to families and also how much the government would pay in aid programs. So it's a challenging period. So what are we doing? We suffered and we have to increase prices, so there was a drop, especially in November, December.
But our thesis is the search for profitability. We're not going to give up this effort to preserve prices. We're not going to do anything irresponsible. So this is our guideline, profitability. What have we done to help, apart from better mix, more added value, change in packaging? So we have invested heavily, heavily in marketing, in advertising campaigns. So we want to add more value to our brands. We have some brands that needed this. The average investment of 1% of revenue to 2%. So with more marketing, with more advertising, especially national brands and adding value in the minds of consumers, is -- naturally will make it easy to increase prices in the future. So we try to minimize elasticity, investing in our brands. So this is the situation looking forward.
With this investment in marketing in Q4, did this result -- what were the results?
Please repeat the question.
Investments in marketing. Do you have higher -- did you have higher expenses due to advertising?
Yes, in the revenue of sales. So I'd like to go back to the D&A. As I mentioned, in the adjustment, inflation. We even highlighted in EBITDA some nonrecurring expenses, and most of those expenses are recorded in D&A. The expenses with COVID restructuring, we participated in programs to help collect blood donations. There are some nonrecurring effects that we separated. You can see that in the table that shows EBITDA.
Our next question comes from Thiago, BTG Pactual.
I would like to ask 3 questions, going back to the market in Q4. In terms of demand and looking at competition, we have the impression from what we see in the numbers for Q4 that the company began a relevant process to increase prices. We see the average prices in the main categories and began increasing prices before others. Then we see the drop in market share grew, Nielsen. I'd like to understand. Does this make sense to see it this way, that you began to increase prices earlier? And what is the effect in 2021, M. Dias Branco versus competition in terms of price? That's the first question.
The second question, looking at the Multiply program. You talk about the savings, annualized, and you gave us some of the items. So we have BRL 350 million for which we don't have details. Could you give us more details about the other activities in the program, relevant, where you saved BRL 350 million? You told us about part of the savings; and the rest, BRL 350 million. So do we see -- so where did these savings come from?
And the third question. You talked about the changes in channel. In Q4, you intensified sales to distributors and large accounts and also cash and carry and small retail. So you increased the sales to distributors. But I want to know, how does this help in terms of contribution margin, more sales to distributors, so profitability? So please talk about this, the results.
Well, I will begin. Thiago, I have a quick answer for your first question. You are right, looking at what we presented and the data from Nielsen. In fact, we began to readjust prices earlier. And for this type of category, there is an effect on elasticity. When we look at the information from Nielsen, the price index, in fact, our prices went up in comparison with the average of the market. And at the same time, we had a drop in volume from Q3 to Q4.
Our expectations for 2021 is to see a normalization of the market situation. So different from 2020, where we had a strong demand in Q2, Q3. We had results. We began to see, as of Q4, a more normal situation. So when demand normalizing but higher costs because of the devaluation of the Brazilian currency and the commodities in U.S. prices. So we're beginning to see a normalization in 2021. Other players also readjusting their prices, increasing their prices.
Now let's begin with the channel. Let's talk about revenue. In terms of channel, the distributors, the distribution channel has a lower average price when we compare with other channels. The distributor does the last mile. They put a markup, but the cost of serving the distributor is also lower. So if you look at contribution margin, so it's a channel that delivers growth, maintaining the same contribution margin. So when we exclude nonrecurring, the main factor for a drop in EBITDA margin was the exchange rates. So deleveraging an increase of prices of commodities in U.S. currency.
With Multiply, we showed you only the main initiatives. We had 188 initiatives. We can give you some more details. We resized some areas, sales team, merchandising team. We redefined goals. We made some adjustments in compensation. We have used robots in some administrative areas, other initiatives in logistics. So there are many initiatives, 188. The ones we mentioned are the main ones.
Fábio, let me help. In the Multiply program, resizing of shifts in plants. We have another value that is recurring, taxes, above -- more -- in excess of BRL 20 million related to deduction of marketing expenses from PIS/COFINS taxes we did not do in the past. So also, we can list other actions getting to 80% of the gains. We can send this to the analysts.
It would be very useful. Just a follow-up question, market share and pricing -- prices versus competition. When you have the area called Attack, South, Southeast, what were the results in price increases and drop in sales?
The effect was stronger in North and Northeast regions, where we had more demand because of the government aid programs. So in the North and Northeast, this was -- the effect was stronger. There's another point. When we look at pasta, it's more uniform. This gets a little less. When you go into a new region, due to your entry, the competitors begin to try to defend their market share. This is what we saw, especially in the interior of the state of São Paulo. With this -- with our competitors protecting their markets, we opted to avoid very high prices in biscuits. So there was a small difference in biscuits with focus on maintaining our expansion strategy in South, Southeast and more aggressive price increases in North and Northeast because people know more our brands and because of our distribution in the North and Northeast.
Our next question comes from Andre Hachem, Itaú Bank.
I'd like you to talk about Q1. In Q4, there was government aid to families, then only the government aid came back in March. So in Q1, do you see a situation similar to Q4 of last year and prices now in Q1 2021?
So thank you for the question. It's difficult to give you guidance about the future. We saw a lot of uncertainty. We see a lot of uncertainty in January, February and the trade being very cautious in placing orders. For example, the vaccination is still slow. We have new variances of COVID. So we will -- so in January and February, the market being very cautious. And in March, we see a better recovery, better recovery in March, much -- in a more clear way than what we saw.
We can't talk much about the current quarter, but it's this. In terms of price, we will continue with the strategy to recover our margins. This happened in Q4. The exchange rates, we were supposed to have an exchange rate of BRL 4.50 at the end of the year according to banks, but this didn't happen. So the exchange rate continues to be very high and did not drop as foreseen by banks. So we need to recover margins. So this is what is in our minds.
Our next question comes from Guilherme Palhares, Bank of America.
A follow-up here in terms of the company's hedge policy. In Q1, we see price, we see commodities with higher prices, and the company had overcapacity. How do you see from now on the costs in Q1 2021? What is the company doing in terms of the fixed costs and lower demand? So do you have any points here?
Thank you, Guilherme. Well, Guilherme, when we look at the protection policy, in terms of commodities, we have a very robust policy, especially in palm oil and sugar. We have lower prices for sugar. The exchange rate, unfortunately, we had few opportunities to obtain exchange rate protection.
Looking at cost, we created a score in January, together with supplies, controllership, human resources, logistics, 5 areas, and we're calling this Multiply 2.0 program. So many things are happening. I would say that the main difference is the review of the footprint. So we may find some opportunities in terms of footprint looking at the plants. With the line, looking at the -- with greater efficiency in production lines. This is what we're looking at in the beginning of 2021.
Since there are no more questions, I'd like to pass the floor to Mr. Gustavo for his final comments. Sir, you may proceed with your final comments.
Well, I'd like to thank you all for participating in our conference call. We are all committed to work. We continue strongly in our strategy for sustainable growth, looking at the long term and looking at regions where we were not -- we did not have a relevant position, investing in our brands And you know that this is the right way, looking at the long term. And we're being very careful with the short term, looking at prices, cost, reproduction and more efficiency.
So in terms of 2021, we want great -- we want growth in revenue. We increased distribution to our shareholders, going from BRL 0.25 to BRL 0.45 (sic) [ BRL 0.46 ]. So the company delivered relevant results in 2020, and we will continue firmly in our strategy for 2021, even with all the challenges we have in terms of COVID and the exchange rate.
Thank you, and our Investor Relations team is available to clarify any points that may arise. Thank you.
Thank you. The conference call of earnings at M. Dias Branco is thus concluded. Please disconnect your lines.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]