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 video conference of M. Dias Branco, referring to the results of the fourth quarter of 2022. We have with us Gustavo Lopes Theodozio, Vice President for Investments and Controllership; and Fabio Cefaly, Director of New Business and Relations with Investors. We inform that this event will be recorded. [Operator Instructions]. The transmission will be also done simultaneously on YouTube at www.youtube.com/rimdias.
We would like to clarify also that eventual declarations that may be done during this teleconference relative to perspectives for business in M. Dias Branco, projections or operational goals and financial goals are beliefs and premises of the management of the company and just as based on information currently available, they involve risks and uncertainties and premises since they refer to future events and therefore depend on circumstances, which may or may not occur. Investors should understand that economic conditions, general economic conditions and other factors, may affect the performance of M. Dias Branco and bringing the company to results that differ materially to those expressed in these future considerations.
Now I would like to pass the microphone to Fabio who will make -- who'll begin the presentation. Fabio, please go ahead.
Good morning, everyone. I would like to thank you all for your participation in our teleconference, referring to the results of the fourth quarter of 2022 and for the full year of 2022. I'm going to start the presentation, and then after that, I will pass the microphone over to Gustavo, our CFO.
Before we start in the results, I would like to mention -- I'd like to thank all those in the market who have accompanied M. Dias, who have participated in our Investor Day in December of '22. It's always an honor and a huge privilege to count on your proximity of all of you and the closeness of all of you.
Net revenue of BRL 10 billion, a growth of 30% compared to the previous year. I don't know. Our average price is at 29%. We had a very rhythm very close to the quarterly vision in the fourth quarter of '21. We had expansion in the volume of 1% in sales volume and the annual provision of 0.3% in the quarter. The costs went up. Here's the vision of our variable costs and principally due to the exchange rates and commodities, oil, palm oil, which had an increase of 31% both in the annual vision as well as in the quarter.
SG&A, which are our administrative expenses, rose by 20%. Remember that in the last 3 years, there was a great effort on the part of the company to reduce until '20 where a level of SG&A would disclose that 25% of our net revenue, and we closed 2021 with 20%. For the quarter, we had 21.1%, which is normal in the fourth quarter and in the first quarter to have a level of SG&A, a little bit higher due to the lower dilution of fixed expenses because these are quarters with volumes of sales lower than the second and third quarters. Over the year, we had an EBITDA of BRL 900 million, which represented growth of 32% compared to 21%. And in the quarter, BRL 121 million, which was a decrease of 34%, which we will explain during the presentation.
Before we go into the actual numbers, for the year and the quarter, we would like to do an overview of the principal facts and the principal initiatives related to our strategy of growth. And we have 3 pillars, which looked at the current -- the category of biscuits, pasta, margarine and wheat-based products, and also the international view, all supported by a productive program of continuous -- continuous program of production efficiency. We increased our market share during the year in the 3 principal categories, cookies, pasta and wheat flour. It's been a highlight in our growth. Piraque is our cookie brand, our cracker brand with a premium price line, and it's the second largest brand of M. Dias Branco and had a growth in net revenue of 36%, above the growth of the total growth of M. Dias Branco and the volumes grew by 11%. We had an intelligent pricing. Intelligent pricing, a process more sophisticated and more granular for pricing of our products, which bottles the new formats and weights of products, which we will show these numbers to you as we go through.
The highlight to e-commerce and the distributors channel to increase our capillarity, especially in what we call the attack areas, which are the regions, South, Southeast and Central West, and also the strengthening of our priority market brands, which are those which have received the investment in marketing and trade marketing. Piraque and Vitarella, which is our biggest brands, and Adria, which is one of our principal brands in pastas.
In other categories, the highlight was the acquisition of Jasmine, which puts us today, M. Dias as lead in the market nationally in granolas, gluten-free bread and integral cookies. We also see that the average price of Jasmine of BRL 20 a kilo, the result of the third quarter -- the fourth quarter of '22 compared to BRL 6.3 M. Dias Branco average price per kilo. So we're entering into categories that have higher potential for growth, higher average prices and gross margins, which are structurally better than M. Dias Branco.
In our international front, the highlight was the Las Acacias, which closing -- closing of -- which closed in October 31, 2022, and marks our entrance into the physical presence outside of Brazil.
On the line of productivity and efficiency, we started the Simplifique project, which involves the implementation of SAP and is ready for the beginning of 2024. We improved our level of service measured by the OTIF, on time info, which means in Portuguese, it means to deliver the agreed amount and the right time -- at the agreed-upon time. This agreement by 2020 was around 40%. In the fourth quarter of '22, we closed 65% and the goal for 2024 is 80% OTIF. Between the beginning of this indicator in 2021 until the goal of 2024, we believe that the benefit of this improvement will be something close to a seasonal month of revenues.
We have improvements in our working capital, especially in the suppliers column, which went from 44 days in 2019, and we closed 2022 with 57 days. And we did a strategic alliance with Omega to increase the percentage of renewable energy in the mix of energy that is consumed by M. Dias Branco. Today, it's 50% of our needs are supplied by renewable energy sources and with a lower cost also. We also had highlights such as the recognition of brands at their top of mind. Their participation in initiatives or start-ups, evolution in the indicators of ESG and the entrance of M. Dias Branco and the ETF, which considers the companies with a higher percentage of women in leadership.
Looking back to our numbers, we're going to start with the numbers from revenue and market share. We had growth of double-digit growth in our revenue of 28% in our quarterly rate and 30% annually. The volumes sold were 0.3% in the quarter and 1% for the year. And the highlight is the increase in the average price, which grew 27% in the fourth quarter compared to the fourth quarter of '21 -- fourth quarter, and 29% for the year. This is drawn through a possible because there are strong brands who were just sure as -- give us pricing power, which is the capacity to make price adjustments when necessary.
The increase in prices happened in practically all of the categories of M. Dias Branco in cookies, flour, margarine, fats and highlights in other areas such as other categories such as snack foods, gluten-free bread, granolas, toasts, cake mix and with the acquisition of Latinex and Jasmine in 2022, we had an increase in average prices of almost 50% in this category. And net revenue in this category doubled in size, closing the year with BRL 345 million.
In the quarterly vision of the fourth quarter of '21 to fourth quarter '22, we had an increase in net prices in all of the categories, increased our volumes in flour and margarine and fats, and a retraction in volumes in cookies and pastas, which we will explain going forward, crackers and pastas. It grew by 2 digits in all areas.
Comparing the third quarter of '22 to '23, something that's been asked a lot by the market, which is our capacity to increase average prices, we increased average prices. That means obviously that we make some readjustments, but also better improving our mix, our category mix, the mix in the category and between categories. And so we had an increase -- average increase of prices of 1.6% from the third quarter to the fourth quarter, with a highlight for crackers and pasta, which are 2 biggest categories. There was a slight retraction in volume, which is also normal in the third and fourth -- in the fourth quarter due to the seasonality of this item, especially in the month of January. And so this -- our volumes retracted in the fourth compared to the third quarter.
Looking at the average prices, highlighting that prices are launches, new launches, we have -- as we've seen, the company is always seeking to launch products with a better, higher average prices and higher margins. We just did the launch in the fourth quarter of '22 in Piraque brand with BRL 20 per kilo, which is well above the average price per kilo of M. Dias Branco products. Between the end of '21 and the end of '22, the increase in average price was due to 3 primary factors: one, due to price readjustments, which happened due to inflation, cost inflation, increase in commodities in dollars and exchange rates, and also the size of packaging, which was changed, especially in the cookie packaging, and the inclusion of higher value -- higher added value products in our portfolio due to the innovations and the acquisitions which were made. A few examples of launches, Piraque with an average price of BRL 20; Adria, average price of BRL 16.7 per kilo.
And here is a more structured vision of our launches, trying to launch products in these 4 pillars: Nutrition and health for food -- health for fit food, the Jasmine brand, Indulgence such as cookies in Isabela; practical foods such as instant spaghetti and snack crackers and snacks with the Piraque brand and Frontera brand. We also grew our revenue by double digits, both in the annual vision compared to the quarterly vision and the areas in the defense and attack areas. Our market share was a highlight for the year. We had a -- we closed the year with our market share above the end of 2021 in the 3 principal categories, which is cookies, pastas and wheat flour, domestic wheat flower, both in market share value, as well as market share volume.
What we see in the cookies and pastas categories was the recovery of market share starting from the second quarter, and in the area of domestic wheat flour and a consistent expansion of our market share since the end of 2022.
Highlighting the market share for Piraque, Adria and Finna. Piraque was our cookie brand, which in Brazil gained the most market share, 0.8% of market share between '21 and '22. Adria was the second largest brand gaining market share in pastas. And Finna was the brand, which gained the most market share in domestic wheat flour in 2022. Exports were at a level -- remained at a level of BRL 200 million. We had here between 2020 and 2022 a slight retraction principally due to the slower volume of sale of wheat flour, but the areas of highest value-added value cookies and pastas had a good rhythm of revenue. And also highlighting the acquisition of Las Acacias, which became part of our profit results in the first of November 2022 but we bring an annual vision here so that you have a visibility of the size of the sales of this company, which is close to BRL 120 million per year.
Closing this part of revenues and market share and going into costs and expenses. Here we closed the year with EBITDA margin a little bit higher than the '21 margin with the EBITDA growing by 30%, more than 30% -- almost 30% in the year. And we had a margin of 4.4% in the year, below the margin of the fourth quarter of '21 and below the peak margin, which in the second quarter of '22, basically due to the high yield prices of commodities, which happened between the second and third quarters, which wound up impacting our results in the fourth quarter.
What we see is that, in this following slide is -- which must be on your screens. On the left-hand side, we look at the price of wheat and palm oil in dollars, both prices in dollar. The red line represents spot prices, and the blue line the average price for the M. Dias Branco stock. What we see -- before we get to the peak of $450 a tonne in June of 2022, the curve of M. Dias was slowed due to the 4 months of stock, which we had on hand and our hedge. So when the price in the market started to fall between July and August, our cost increased a bit because we had already postponed the increases for this more expensive wheat from the war, principally for the fourth quarter of the year.
We think -- it was also a quarter with lower volumes due to seasonality. And we had 2 relevant impacts on our margins, which once -- coming to 4.4% of EBITDA in that quarter. What we observed in the market price, until February of 2022 is the continuity of the falling prices. In February, we saw a price -- a market price of $339 per tonne of wheat, which is still below, even a little below what we saw in March of 2022. So this is a signal that the price of these commodities are dropping. The dynamic for palm oil is the same. When the war started, the price went up. It took a while to hit our results due to the stocks and hedges that we had, but the market price today is below in the period at the beginning of the war. So we have 2 signals that show that the costs tend to fall in the market, they're falling and tend to improve our margins at some point in time during this year.
What we see now in the following slide, looking at this vision of costs, separating variable and fixed costs, our gross margin for the fourth quarter of 24.8% gross margin below the fourth quarter of '21 because our variable costs were higher, mainly due to what we explained earlier with the questions of commodities in the both wheat and palm oil, which are priced in dollars. Our administrative defense and the annual vision were below the previous year. And in the quarter, they were 21.1%, a little bit above the fourth quarter of '21.
And this quarterly vision, we see here in this slide, when we compare the SG&A as a percent of net revenue in the fourth quarter of '21 and the fourth quarter of '22. Basically 4 factors, which made this SG&A as a percentage of net revenue increase. The inclusion of expenses from acquired companies Jasmine and Las Acacias and Latinex, it entered our results in November 3, Jasmine in August 31, and Las Acacias in the 31st of October. So principally Jasmine had an EBITDA margin still lower than the M. Dias' rate. And the thesis of this investment is to double or triple this company in size and diminish its fixed costs and have a result, which will be favorable in its EBITDA since this company and brand has an average price well above M. Dias and gross margins well above M. Dias.
The second factor was an increase in provisions for doubtful receipts depending on certain clients. We had some expenses with acquisitions, especially in the case of Las Acacias, an increase in the relevant increase due to the decrease in volume. Our volumes grew by 0.3% in the fourth quarter compared to the fourth quarter of '22, and several additional initiatives in marketing, especially in the Piraque brand.
Our net revenue accompanied the tendency of the EBITDA in a way that was a little bit faster rate due to the financial results, which was negative and above what we registered in the year of 2021. We saw a demonstration between the EBITDA of 2022 and the net revenue of 2022, and the financial results were negative in BRL 231 million due to the increase of our gross debt and also the increase in the Selic interest rate. The total debt, gross debt was bigger due to the acquisitions, which happened during this period and also to distribute an extraordinary distribution of interest on capital in this quarter.
From the generation of cash and dividends in this area, we finished the year with a leverage of 1.8% above the net cash position of negative 0.2% in 2021 due to the distribution of interest on capital, acquisitions, fixed assets were acquired, an increase in working capital in the line of inventory if we're to improve our services.
Our gross debt for the year, we finished the year with 2.2 billion in debt. An important point here is that only 25% is in the short term and 75% with this chronogram that you see here is in the long term. We closed the year again with a AAA rating with a stable perspective from Fitch for the fifth year in a row. Our investments in CapEx were BRL 280 million for the year. Growth of 34% with 2 highlights. The added -- changing our machinery to change the weight of our prior packaging and initiation of the implementation of SAP. Our stock went up by 52% above the 4.7% of the principal index of the stock market.
Now going to the sustainability agenda, ESG agenda. For the third year consecutively, we went into the easy portfolio, ISG portfolio, with an improvement of our point rating in -- since the 2018. Since we've been in this portfolio, we've improved our standing and our points standing. We reduced our emissions from greenhouse gases in Scope 1 and 2 with a highlight for the year of 2022, which is our partnership with Omega, which increased the representativeness of our renewable energy in our energy mix.
Here are several indicators, which we're going to make available for your analysis. And before that, I wanted to pass this over to Gustavo, an overview of the principal facts, structural facts for 2022, the increase in our services.
We closed the fourth quarter with 65% OTIF. Our goal is to get to 2024 with 80%, which brings an additional month of revenue. The organization redesigning the creation of strategic areas, the Vice President of Supply Chain and Directory of commercial strategy focused on pricing, gain on market share in the principal categories, 3 principal categories, maintenance of our SG&A and 20% of our net revenue, improvement of our mix with items of lower added value, a larger added value due to launches and acquisitions. Our first acquisition outside of Brazil, which is Las Acacias, 75% of our debt in the medium to long term and an improve in the rates of sustainability, ISE, MSCI and ESG.
So I now pass it over to Gustavo, and after that, we'll go to the questions and answers. Thank you.
Thank you, Fabio. Good afternoon, everyone. Good morning, everyone. To conclude our presentation and go to Q&A, I would just like to mention that the company continues in its trajectory of growth, sustainable growth. We've improved -- our process has reinforced our team with professionals focused on growth and profitability. We have important improvements in all the lines. It depends on our management delivering top line, a record EBITDA of 10 million, and this growth of EBITDA year-on-year reached 900 million of EBITDA. Our top line grew consistently with the growth of expressive growth, pricing power recognized by -- in the company a better mix, the fruit of innovation and acquisitions.
On the operational side, Fabio ratified the important evolution in level of service, which is very important for the point of sales with the program of Perfect store. SG&A under control, close to 20% of the net revenue. Remember before 2019, it was above 25%. The team structured and set up with new professionals, bringing new tools. We brought in a new VP for Supply Chain to better control the small retailers. Store planning, logistics planning, all of the part of relationship with our suppliers, I would say, new professional in the management who has helped us with the promo packing pricing.
Our costs have already started to improve with the cooling off of worldwide prices. We have new tools, new hedge tools, inventory mention tools. Our cash flow is very, very robust. Our cash situation for these points, we think that the company is on the correct trajectory and will come out even stronger from this challenging moment in which we are. We started in '20 with the pandemic, then we went through the Ukraine War, and now here in Brazil, we have an increase with the questions about the election, which also affected the exchange rates in Brazil, made foreign currency very volatile.
I'm going to now open up for Q&A, and we can discuss a little more the results of the fourth quarter and what we have done here internally.
[Operator Instructions] Our first question comes from Leandro Fontanesi from Bradesco.
Gustavo and Fabio, I have 2 questions. The first is as you mentioned in 2022, you did very well. But when we look at the results, the quarterly results, there's usually a big variation in relation to the expectation of the market, of the consensus. So I understand that part of this variability in margin due to the commodities prices, but a lot of what is explained with the difference in relation to our expectations is the question of volumes and also SG&A. So thinking that the investor in general, received well when there's a high better predictability of results, how should we look at these numbers going forward, these predictions? Do you think this variation is inherent to the company? Or will it be something for the investor to have more predictability in the results?
The second question, last year, as you mentioned, there was not any relevant payment in the first quarter of the payment of interest on capital -- on capital, which we received by the investors in 2023. How should we look at the distribution of JCP of cash for -- if will there be a relevant distribution as there was last year?
Leandro, thank you. This is Gustavo. I'm going to start, and I'm going to let Fabio comment on as well. I'm going to start with the second question. The question of the distribution of JCP, of the interest on capital. We had a very strong change about 2 years ago, where we increased the profitability to distributed from 40% to 60%, and we implemented these advances at the beginning of each quarter. We're going to maintain this program, which should not -- there should not be any extraordinary distribution this year. We have no provision, no intention on the part of the company to do -- make new distribution or extraordinary distributions. So item one of the predictability, Fabio can tell you better.
I think it has a lot to do with capacity of stocking for M. Dias and our hedge policy. When the war began, the pricing in the market had a very, very rapid increase, very strong increase, and our increase was only cost of stock was much softer, much easier. Obviously, the same thing happens when commodities head downward where the market takes these spot prices, take advantage of these spot prices with a downward curve. But the rest takes a little longer to catch to serve on this wave of cooling prices.
So looking at the future, we don't usually give guidance, but the question to show a little bit of the prices in the market without talking about our costs. But the prices in the market are also heading down. What we perceive is the improvement in volumes in '23. We see a -- '23 is better than '22. Also with a clear falloff in stocks and prices globally, as well as also for M. Dias, you're going to see an increase, a better relation of costs lower at least in the next few quarters. But the predictability is much more headed there, and the average cost of M. Dias is due to the instruments of control and hedge that we have already described.
Our next question comes from Lucas Ferreira from JPMorgan.
My first question is about the performance of volumes of cookies and pastas in this last quarter. If you can explain a little bit this fall in volume at the end of the year, how did the market do -- since you showed that your market share actually increased and explain a little bit what's happening with inventories and the channel supply. The stock begins the year. Is this still poorly adjusted? Or what would that indicate for perspectives for the first quarter? And as a consequence, my second quarter -- my second question, which is about prices. Do you think there's still space for any more price adjustments looking at the second quarter? Or how do you see the elasticity for the consumer? Or if you see the industry, let's say, lined up in this necessity to do price increases, and how is that behaving in this current scenario?
Lucas, thank you for your question. I'm going to start with prices, and then Fabio can talk about the question of volumes and how our stocks are doing in the first quarter and in the following quarters. Independent of the question of costs, we have suffered some inflationary pressure for the cost personnel, the unions, logistics. And due to that, we have seen a space for some possible new increases. However, clearly not in the same proportion as we saw in '21 and '22, but eventually, there is some space. We haven't seen a retraction in volume, relevant retraction due to the elasticity of prices, but being very objective with based on facts and data, the company has a margin more than 40% to gross, greatly due to the size of its packages and the mix. But with this margin growth, we still had volume that was stable, any study of elasticity that would point out an increase in prices of 30%, which show a volume, which would be falling off very greatly, which is what happened in 2022.
For '23, the predictions are that increases will be lower. There's still space. But no space for radical increases as we had in '22, and we also don't expect the relevant elasticity in our volumes as well. Fabio will talk a bit about that more. But volume now in the fourth quarter to understand what happened.
Lucas, good morning. I think the principal message here is we did not see any demand problem at the end of last year, and we don't see any probing demand in the beginning of '23. It's normal to have a falloff in demand in -- from the third to the fourth quarter in the categories of cookies and pastas, but we had an unfavorable seasonality, especially in the month of December. And what we saw basically in the category of cookies and crackers, the sellout, which is the demand was it had a retraction from the third quarter to the fourth quarter of 5% retraction. Our volumes of M. Dias with the sale of M. Dias to retailers had a retraction. A bigger retraction, principally due to a retraction more accentuated retraction in the month of December, which in our vision is due to a re-accommodation of our inventories in the retail world.
At the beginning of this year, we see behavior, increasing volumes, both in sell-in as well as sell-out principally starting in the middle of this quarter. So we don't see any problem in demand at the end of last year. We don't see any problem at the beginning this year either. Our stocks, our inventories in the chain of supply, showing that our clients are also stable, and we have observed this since the end of last year and the beginning of this year, something close to 45 days, which we understand is a level, which is very adequate for both categories, for both cookies and crackers as well as pastas.
Our next question comes from Rodrigo Almeida from Santander.
Gustavo, Fabio and team, I wanted to touch on a few points. First of all, I want to talk about your cash flow, your working capital and your margins in the quarter, which is inherent to the business, and also understand how this dynamic of hitting at a peak of costs, and now we're going to have this reversion of costs, how will this impact your inventories and your working capital going forward. What I really want to see is you have any -- if you see any need raising working capital in the next few months, perhaps having a quarter, which will be a little bit more complicated in margins, but to unlock some working capital due to this cooling off costs, and coming back with this 1. Second, we look at this in relation to these 2 items to conciliate these results, which are more timid with this movement of your cash flow.
The second part which I wanted to mention is talking about your portfolio. I think part of this SG&A, which came in higher in nominal terms is related to your -- doing better marketing of your products, winning new clients, saying that we've talked about a lot. If you can talk to us a little bit how we should look at SG&A in nominal terms during the next quarters, I think it will be very interesting. And also in this latter on the side of the portfolio, how satisfied are you in relation to your strategy of focusing on the principal brands and bringing them to the Southeast with the objective of defending yourself better and then going into the Northeast as well, leaving your portfolio a little bit more premium. How are you satisfied with that so far?
Rodrigo, good morning. Let's start with working capital. Your assumption is correct, we should liberate, free up some working capital. If you look at this, this will come in the next quarters basically due to our inventories. We should see that liberating this working capital will happen in the next quarter, the next portfolio works with full speed ahead. We started our sales convention this week, the focus of the conventional we saw, what we call focused on strategic items. All of the -- these questions are related to the sale, this qualified sale, and this mix of higher added value, products with higher added value. These other revenues and these products present less than 5%. And so we think that we have a space for this to get to at least 10%. Jasmine, which was the company which is going to help us a great deal in this question of better margins and having a portfolio that's richer was acquired only in November. So we're still at the beginning of this process of integration and scaling up the company.
We've had today all of our DC, our distribution centers are 28 around Brazil. And we're still receiving products from Jasmine just starting to receive even with companies that are not totally interconnected, but our distribution system is starting in 2023, and we'll see the capacity to distribute with the M. Dias trucks also delivering the Jasmine products. It's a trajectory, which I would say is still between 3 and 4 and a scale of 10. So the work is still going forward, and we'll be focused in 2023. Pass over to Fabio to add anything.
The only thing I would add is SG&A. Our expectation is to maintain as we have been signaled to you for a while to maintain SG&A and a yearly vision at a rate close to 20% of net revenue. Remembering that there's a certain seasonality, an unfavorable seasonality in the first and second -- in the fourth -- first and fourth quarters. So these 2 quarters, SG&A as a percentage of net revenue is a little higher, and the second and third quarter is a little bit lower. So in our vision, it hasn't changed in the third -- in the fourth quarter, it was a little bit above 21%, but it doesn't change in any way our vision.
I think that the highlight being a little bit repetitive, it's important to point out that we had starting in the fourth quarter inclusion almost complete of all of the latest acquisitions in our SG&A and especially Latinex and Jasmine due to the growth of 2-digit growth, at least 2 digits year-on-year. And this will gradually -- will quickly dilute our fixed expenses and bring these companies to an EBITDA margin above the average of M. Dias.
If I can make a short follow-up on this point. There were several items onetime expenses during the year and also in the fourth quarter. Can we expect more movements, more expenses related to the strategic movements in the next quarters in relation to looking at the question of logistical readjustments and other items, which might be one-off expenses, which might again impact results.
Rodrigo, nothing that will take SG&A from this level of 20% for the year.
Our next question comes from Thiago Duarte from BTG Pactual.
Gustavo, Fabio, I wanted to make 2 questions. The first is about the mix of channels, part of what we saw the growth of distributors and key accounts nationally and regionally, I think that was expected in a certain way, but it gives the impression that they're coming largely on the account of the small retailers, the small retailers. And what I wanted to hear from you a little bit about how should we imagine these sales, direct sales to direct retailers -- direct sale to retailers, the participation that they might have in your business. And along these lines, how can this change of mix, at least in part, explain the pain felt on the gross margins. The other factors which you mentioned about the pressures of commodities costs and so forth, but I wanted to understand how the mix in channels will impact the gross margins of your business in terms of -- when you had cruising speed. And how do you see this going forward?
The second question, I think that there's a certain expectation in relation to the transfer of these costs, which are falling at the binder acquisition, especially for wheat flour and oil which has this happened -- it didn't happen as fast as we thought in the fourth quarter as we saw in the fourth quarter, but it's interesting to understand at what speed we should expect to see these falling prices affect margins. Looking at this -- when we look at the levels of products ready to sell suggests that this transfer, this capture of costs, the costs falling might be happening a little more slowly, not only in the first quarter. If you arrive at moments of margins, we saw your opening margins month by month during the quarter as a way to signal how this is happening.
Well, I don't suggest you do this right now, but if we can imagine when and with what intensity we could -- we saw a little bit of this in the fourth quarter or if you're seeing this in the first quarter to understand the capacity of capture in these costs in the results due to the magnitude of the impact being relevant. If you could talk to me a little bit about that, I'd really appreciate it. Those are my 2 questions.
Okay, this is Gustavo. I'm going to start the second question and then let Fabio handle the first one. Cost, transfer of costs, what we're going to do is, as we've commented in the opening of our quarterly numbers, it's important to look at a little bit more predictability to you. And we're going to do this in the first quarter of '22. I think it's important due to this pass-through of costs. We're going to try and open up January through March. But also giving a little bit of color in relation to what we have, we're also already going to see this -- the reduction of international costs, international prices, which will come in at the end of the first quarter and should impact substantially, I would say, almost completely in the second quarter of '23 to be as objective as possible without going into any guidance. And we also hope that we won't get more expensive.
Looking at the first question, your first question, in relation to the mix of channels, your reason is correct. We have observed over the last quarters, an increase in the participation of distributors, which is a channel that we understand is necessary and very relevant, very important to accelerate the growth in the attack areas, which definitely from the North and Northeast regions and Rio de Janeiro, where we already have a distribution in-house distribution, which is quite fragmented, quite pulverized, but in the other regions we don't have that capillarity. So this channel, to gain this capillarity that we need in these other regions.
So I just wanted to also add on to what you said. The mix, yes, has changed, but it has in nominal terms all of the channels grew. When we look at 2022 compared to 2021, we had growth, nominal growth of revenue in every channel. So there is not being a substitution. And there's not being a transfer from revenue from the small retailers to the distributor. What's happening is a total growth, a more accelerated growth in the distribution channel when compared to the small retail channel. This principally do, outside of the regions of the North and Northeast.
The question of margin, it is a channel, which has a margin, which is slightly below the margin that we have in the small retailers. But due to the dilution of fixed costs and fixed expenses, the impact of that is not relevant for our results. It doesn't remove the company from the potential for net profit, which is historical, which is between 15% and 20% historically.
Our next question comes from Guilherme Palhares from the Bank of America.
As far as the question of pricing, we've been talking a lot about costs that the scenario has been improving for 2023. I wanted to understand a little bit when we look at the numbers of IPCA. We still see a sequential increases month after month, both in cookies and crackers, as well as in pastas. When we look at this scenario of cost deflation, how do you imagine in terms of pricing and the effect. We see that the average price of the company has gone up quite a bit above inflation during 2023. And when we look at this over 2022 and 2023, is it fair for us to consider that the same -- the [ state-owned ] behavior will be repeated, whether it be due to launches or questions of packaging or if you can mention a little bit about how do you see this scenario of falling costs?
My second question is trying to understand when you look at the rest of the industry, the other millers and other manufacturers, do you see their stocks being higher or lower? Just having to understand a little bit how the increase of margins will happen in the entire chain. We know that we're going through a very difficult situation due to these higher costs, but how do you think it will happen this return of costs? And up until what point there's a risk in your perception of having some type of competition, price competition as costs come down.
Hi, this is Fabio. In relation to competition, starting with your question about competition, we don't have any information in detail to make any affirmation, but we imagine there will be a similar dynamic to the M. Dias dynamic, where our average price above inflation, increasing average prices above inflation, you've touched the principal variables. Obviously, the readjustment of prices was necessary in 2022 due to the exchange rate changes and the high increase -- the strong increase in prices in dollars of commodities. However, we know that companies are more sophisticated in their pricing programs, and they're less and less dependent on the increase in prices to increase their average price. An example was the Piraque brand, which is our brand which grew the most during the year. They had growth of volume year-on-year of 11% versus 1% for M. Dias overall and growth in net revenue of 36% Piraque versus 30% for M. Dias. When we look at this in the cookies vision, it's even more accentuated.
Volumes of Piraque in cookies, which is the principal category of the brand, grew by 21%, while M. Dias was 0.2%. And then net revenue for Piraque grew by 39%, NRM 30%. So it's a brand which has an average price that's higher than the average of M. Dias and which is growing faster. So this is reflected in the average price of the company. There's also a whole bunch of work that's being done in relation to our mix, with our innovations and our launches and our acquisitions. Jasmine, for example, has an average price of BRL 20 a kilo, because with the market does it mean it grows even though it represents very little of our results, but the contribution that we'll give to our average price and gross margin with a faster growth is deeper disproportional to its effect on our overall results. So what we see a possibility of increasing prices over the year above inflation, not only due to readjustments, price adjustments, but also due to these other 2 levers, which is a question of, as I commented earlier, the comment -- the questions I commented on earlier.
Let me see if I understood. So we're looking at pricing in line with what inflation should be for the year, except for the mix effect, which is a premise which seems fair to have this scenario. Is that correct?
What we're seeking is to structurally have an average price less and less dependent on price readjustments. And I'm going to let you make your own calculations in your own model.
The question-and-answer session is now closed. We would like to pass the microphone over to Gustavo for his final considerations.
We wanted to thank you all for your participation. Let you know that our IR team is at your service for anything you might need to facilitate your models. And if you have any questions about the numbers, and also leave a message that the company is in a correct trajectory, coming out more stronger from this challenging moment. And structurally with its process is more robust and ready for growth, not only in terms of volume but also in terms of quality, both qualitatively as well as quantitatively with the effect, Piraque growing 11% when the industry grew by 1%. So structurally, the company is in the correct trajectory in variation, which is very well, seems to be very well placed.
So thank you all for your participation and for future calls. Until the next one, thank you very much.
The video conference of M. Dias Branco now closed. We thank you all for your participation, and please, have a great day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]