Ebro Foods SA

MAD:EBRO

Earnings Call Transcript 2018-Q1

[Antonio Hernández Callejas, Chairman of the Board & CEO]

Shall we start then? Well, good afternoon, and thank you for those who keep on attending these meetings because, well, there is less attendance, unfortunately, this session than on previous occasions. I believe someone else is coming, we will just wait for a few seconds. Congratulations, by the way. [So the Chairman, he is congratulating somebody for his birthday.] From now on, I'm going to ask my team to just do the presentations and slides without so many pictures. In view of our sustainability, we're trying to define because my goodness, we're always talking about recycling, and now look at all these pictures on the pages because -- then you just throw them away. I'm going to kindly present the first quarter's results that have been, I believe, anticipated by my team on this quarter. And at the end of the presentation, I will just give you my own personal assessment. But basically, the business is growing, however, we've suffered a very tough first quarter because of the cost of raw materials.Right, first quarter 2018. We have to compare it with best quarter we've ever had, which was an all-time high. So it is very complicated. After the first quarter in 2017, we've had an all-time high for the division of plus 18%. We've never had such a rocketing result in both North America and Europe. Well, unfortunately, first quarter's results for 2018 are significantly lower due to the rise in the cost of raw materials of roughly 22% on average, mainly affecting Riviana as a consequence of the pickup in aromatic rice and long grain rice prices. The biggest increase was basmati. But on Q4 this year, jasmine from Thailand also increased its price, which is a very important part of Riviana's sales, where we are the key leaders in jasmine rice. The prices were rocketing, and it took us amidst the process where we were doubling capacity on our facilities where it was very difficult to get more raw material because you had the bricklayers inside working. So basically, the whole facility was overcrowded.We are trying to double the capacity. And now this pickup in price, it coincides with a moment where we're overwhelmed with engineers, bricklayers; and it was very complex to stockpile more in these places when you try to store on the suppliers' facilities. It's a very complicated thing. There was, however, an increase of 22% of American rice. This increase, which initiated with the 2017, '18 harvest starting in Europe -- well, in the U.S. around September, where as it is October in -- by October in Europe, and then Thailand. Although, we've managed to do by April, May, to account for this -- or to pass on the prices, this pickup in raw materials cost.The price pickups have had an impact on the area of about 20%, whereas in Europe, we are very much concerned. We had anticipated a very profound [ drought ] and we were very concerned. There was no rain. We had suffered a horrible situation of [ drought ] and the possibility of not being able to harvest anything in Spain and Portugal was over there, that was a continuation of the problems with the price increases in Asia and the U.S. and the situation also in the different reservoirs here in Spain. Now, however, with a massive rainfall, we've reached 58% capacity in our reservoirs in Andalusia and Extremadura region and even above 90% in Portugal. So we have excess supply of water that has benefited our land, and now that's benefiting this year. There is two sides of this coin. On the one hand, good news, disappearance of this uncertainty; and the second is that Ebro had to strike deals with the farmers at more expensive conditions. When you strike deals in January and February with 28% of capacity at the reservoirs, they were considering not even selling because the question was, are we going to have sufficient crop area? Will we grow anything? Yes, of course we will. And we have very, very hefty stockpiles, and because we've covered ourselves in the event of not growing anything. And we didn't want to jeopardize anything and we are not very much in favor of not covering risks. So this coincides with a moment in the United States with the horrible cost of raw materials, plus other issues I already mentioned on our previous meeting. On the one hand, shortage of personnel in some of our plants and, in particular, some maintenance personnel because of the hurricanes in the Freeport facilities that suffered a shortage of maintenance people. No lifts were working, so our maintenance people had to work very hard. And as I said, there was a tremendous shortage of maintenance personnel. We've had people leaving the company and we have to maintain a certain level of employment over there. And on the other hand, this also coincided with an increase of logistics cost that affect every one of about 10%, which is also partly due to full employment as well because in the U.S., they have changed their regulations. Drivers could freely drive as much as they wanted, as many hours as they wanted. Now it is very much aligned with the European regulation, thus curbing the number of hours that can be -- that any given driver can drive to transport materials. So when they used to do 14 hours of driving, now they have to do 8, and that limitation leads to a lot of complexity, logistics plus the fuel pickup in prices.So this shows you how complex this first quarter has been. On the flip side, quite positively, volumes are very good, in a fairly flat market honestly, but not negative yet. Where Ebro's brands are growing well are both North America and Europe. And in the U.S., I mean the entire EBITDA decline, part of it or 90-ish percent is the U.S., rice for the U.S., obviously. During this quarter in rice, we've had 23.7 increase in market share, 4 basis points of increase. We are doing quite well, but our margins have declined because of the transfer of these tariffs and the unfortunate events we've suffered, which can happen sometimes, but unfortunately, they all coincided at the same time. Just like our former Chairman [ Zapatero ] said, the President of Spain, when these alignments of stars takes place, [ says the ] Chairman ironically. Anyway, we're going to walk you through the first quarter's results, which indicate a very healthy growth in sales, rising up to EUR 346.1 million, plus 2% increase. Even greater, we discount the euro-dollar effect. The average was 1.22 this year, obviously. Sales would have been much higher had we excluded this or had we included at constant FX terms? However, the division's EBITDA fell by 25% to EUR 45 million with a 13% margin due to the aforementioned problems in North America, which I won't repeat, obviously.The FX accounts for 3% in EBITDA terms, sorry, [ says the speaker ], EUR 3 million, and the operating result decreased by 26%, mainly affected by the significant cost of establishing new frozen goods lines, and this accounts for EUR 42.6 million. The frozen goods line has been a sheer success. Obviously, we had difficulties when starting up a new facility, but we've solved everything. We have the most modern line in the United States, the cutting edge line and the quality of facilities is becoming tougher, and yet, we are the most modern facility. We still have to do a little bit of fine tuning in production. As far as the EBITDA is concerned, there was a short delay, but these EUR 3 million are a consequence of the FX eurodollar.As far as the pasta division is concerned, durum wheat has been a very stable market, although with a downward trend. And harvests are expected to be strong in Europe, which will soon start by mid-May in the northern part of Africa and Europe. The March and April rainfall has been a sheer blessing, thus allowing us to have a very abundant harvest this year. And the harvest forecast in the U.S. is very, very positively similar to the previous year, therefore, we don't see any problems with regards to raw materials.We've hedged all of our procurement for the 2018 year. We are trying to think about procurement in -- during the first quarter of 2019. The raw materials situation, on the other hand, is driving competitiveness given very low prices, not only in price-oriented markets like hotels and restaurants, but brands are very aggressive now at the moment. Therefore, we continue to have more promotional activity than advertising activity. In France, on the other hand, sales are doing quite well. Panzani, until the month of April, has increased by 10% in revenues. In our existing sales mix, it's worse because we grow among the most popular retailers. The pick of crop, so we grow, but probably they're not giving us a lot of margin or profits in this regard, unfortunately. Those segments where we operate with Panzani, we've increased our market share and we are securing our clear leadership in the market. That's giving us security in strategic terms. We've retained the pâté and sandwiches, [ Monterrat ], that we're defining. I mean, sandwich was very labor-intensive, so we are trying to change it honestly now to move from a sandwich-based market to an appetizers or snacks, honestly -- our snacks business. So -- but we hope to be back on track on profitability. Garofalo, on the other hand, proves to be very successful penetrating the French, Italian and Spanish markets, which is very expensive honestly, because these are very mature markets. Introducing ourselves in these markets is not for free, and it's no picnic. But Garofalo is already a recognized brand in France and Spain, very much appreciated in the U.S. and other countries. In the U.S.A., we have been hit by rising logistics costs affecting rice and pasta. But we're seeing the light at the end of the tunnel: Riviana has increased its market share on Q1. We are the only brand in an [ upgrowing ] trend among all the American brands, which is a very positive factor. We have also recovered some distributors in the American Southeast that we've lost some years ago. And we've also redefined having innovation not only in the health sector, but also the pleasure homestyle sector, thick and hearty pasta that absorbs sauces really better, and also the homestyle, as I said. These products are working out very well. During the first quarter, we've also completed the acquisition of Bertagni, a clear strategic move that makes us the second biggest competitor in the global fresh pasta market. And we are convinced it will drive synergies with Panzani and Olivieri because of their very powerful know-how and sales activity that is bringing us new ideas and new values.Our turnover for the first quarter of 2018. Well, here, we need to take into consideration our raw material prices in the non-branded part, we've got to give better conditions. However, in the branded part, more promotions. That's why its value is decreasing. Also, we are affected by the weakening dollar, but we are increasing our volumes nonetheless. After the strong advertising effort on Q3 2017, relaunching several brands in the U.S. on Q1, 2018, we need to be among retailers, increasing our promotional activity, reducing by minus EUR 6 million our advertising activity, up to EUR 60 million, although the profits are very good in the U.S. namely. EBITDA for the division declined from [ EUR 36 million to EUR 34.8 million ] this year. And the operating profit declined by 10% because of the strong increase in the first quarter of 2017. And here, we are very affected by the sandwiches situation in France, and also the Garofalo expenses [ distant ] fees are more than the business itself.If we now move on to the consolidated results. The sales figure fell by 1% to EUR 629 million due to exchange rate differences and increased promotional activity in the pasta division. Excluding the dollar effect, our consolidated sales will be up by 3%. Advertising investment fell by 19% to EUR 22.9 million, primarily due to a greater weighting of promotions. Taking into consideration the extraordinary components in support of the American pasta brands, EBITDA fell by 16% to EUR 79 million, primarily due to the purchase prices of rice. The exchange rate had a negative effect of -- on prices, causing a EUR 3.5 million fall in EBITDA. The change in the scope of consolidation contributed EUR 2 million. Operating income fell 20% to EUR 64.8 million. The net profit fell by 15.8% after a translational quarter, in which we have been very penalized. Debt performance. We ended the first quarter with the net debt standing at EUR 610.1 million, nearly plus EUR 93 million higher than in year-end 2017. EUR 82 million have been paid already by Bertagni, by this acquisition, so EUR 82 million is a consequence of the acquisition of Bertagni.And the equity grew by EUR 2.3 million up to EUR 2.2 billion approximately. And we are continuing to analyze the nonorganic growth opportunities. The risk has materialized. The increase of rice prices in the different geographic areas, the dollar weakening and the extraordinary expenses that we've have had in the U.S. of cost because of the shortage of personnel in certain facilities, the new transportation policy fuel increase -- or fuel prices. We've been benefited by rainfall as opposed to drought. Now, however, we have been fully covered. It's always better to play it safe. It's always better to have a harvest than not. After a long period of investment in advertising, we're giving greater weighting to promotions this quarter. Although, this is a temporary situation, and on the second half of the year, we will relaunch our advertising. If we launch any one of the items. The fresh products are a very important business because of the acquisition of Bertagni, 12.2% of the group sales. We have numerous major organic development projects in Thailand, India, in ready-to-serve that have been paid already but they are not paying out yet. We don't have any payback. Although, hopefully, the organic investments in CapEx of the past has been paid already, but it's not reaping fruits yet. And it's not giving us any profitability, yet. Just yet. For the second half, I believe we would have accomplished Thailand, then part of the Indian project, the Memphis facility for RTS. We are reaching productivity shares that are according to expectations in frozen products as well. The second half should deliver greater efficiencies in terms of the organic investments. Therefore, by and large, if raw materials haven't gone up in the U.S., would be me seeing the same results that we've had in history with the all-time high of the first quarter of 2017. But unfortunately, raw material prices have come up. So we're talking about a minus EUR 11.5 million in EBITDA. With the FX results, it's EUR 15 million. So EUR 3.5 million because of the currency exchange. This is the analysis. The European rice year is very similar to the previous year. Although, we paid it daily to farmers. The activity in France, especially with regards to pasta, improving results on the pasta, North American region improving. And another last problem in the U.S., which unfortunately coincides with the hurricane aftermath, the full employment situation, with some logistics hindrances, we've suffered a minus EUR 11.5 million decline in EBITDA. What a pity, really, because otherwise, we would have met the same results that we did last year. In terms of raw materials, perhaps we could have improved the situation in the U.S. but not in Thailand.We didn't have everything available because of this temporary situation. Our facilities were crowded with bricklayers working on the doubling of the capacity, and we haven't been able to cope with this. This is a rather sour feeling. We always tend to benefit from the pickups in the markets. This time around, we haven't been able to leverage on these pickups.We're currently trying to transfer these prices to final consumers. We have to take the lead. I mean, we don't want to wait for the competition to just take these and then we jumping on the bandwagon lastly. No. We want to take the lead. We want to discuss price increases. And I'm sure they won't be delighted to receive us with this news, but that's it. I mean, what can we do? So now we'll open up for Q&A. Thank you.

[Unknown Analyst]

Antonio, I have 3 questions. The first one has to do with the price increase that you have announced in rice from April-May. Price increase, price increase, retailers price. Is this price increase only to reflect the raw material increases? Or is it sufficiently enough to reflect some of the salary inflation and the logistics cost that you've experienced the U.S. that can affect the level of profitability of the business? Secondly, you also mentioned about the group's productivity levels affected by the processes to increase productive capacity. When shall these processes terminate? Are the plants at the adequate levels, utilization levels? And thirdly, regarding your advertising investment, you've commented on your intention to go back on track and recover these investments. Is this at a group level? Or you are talking only about pasta, which has heavily suffered on the first quarter?

[Antonio Hernández Callejas, Chairman of the Board & CEO]

The rice price increases. There was 1 worldwide related to basmati that was initiated already last year, that has been [ projected ] in time and it took us a long time to implement it, both in affecting Europe and North America. And it was very costly because we have a deflationary position in Europe among European retailers, and we've lost certain references, and basmati used to be [ $700 ] and it costs twice as much now. They continue asking, do we still have any offers, but in the past, periods used to last like 3 months, now it's 6 months. And in between, you may lose some distribution points that are then recovered that have suffered an influence. And the price increases are not easy, and you're asking me if on the price increases, we're also contemplating additional expenses because, let's say, the fuel prices increases or the labor situation in the U.S. Well, let me start by the end. The labor or the full employment is not so much of a problem. The problem is a shortage of personnel. Our problem wouldn't be too meaningful, it'll be immaterial really. However, if you lose 15 electricians in Freeport, if your tension lines collapse, you need to -- it's nerve racking to find someone and you have to pay them twice as much, because there is a shortage of electricians, for instance, where 10 people only, because there is -- there is a craziness, and they do hostile takeovers to take and steal the electricians from you, especially in Texas more than in other areas of the U.S. What is the impact? A very negative one, because then we start doing things where it's -- if I lose capacity, let's say, in the southern part, things that I should be doing in the south, not in the center, I have to do it in the center of the country because I don't have sufficient FTEs there. These things are going to be solved quickly, I believe. Everything will be right on track. Our price increases are very much a consequence of the raw materials increases. And another story is the logistics. Because today, logistics cost year-on-year are $7 million. So during the same transportation we did last year, for that, we've got to pay plus EUR 7 million more. And we've got to solve it in other ways. We will try to solve them differently because when it is about increasing prices, our distribution argument is very much supported by the cost of raw materials that they also suffered in their white labels. You also talked to me about productivity. This is a great matter, because when you build up, land engineers go and tell you: this is your capacity 200 plus 200, 400. Then you have them all under ops. And when you don't have good maintenance people, for instance, 200 and 200 doesn't go up to 400. It goes to 320. The cost is not the same, and it takes you a very long time because of the deficiencies. It's just a learning curve, a learning period. But that always happens also linked to the shortage of personnel. It takes us longer to fine tune these lines. I'm not concerned about this -- my concern would be if Brillante or Minute is not growing in market share, which is not the case, thank goodness. It will take us a few months to deliver the existing target, let's say, 400 packages per minute, but you know what? It is happening on the same quarter where we -- when we are transferring these price pickups. Well, that's life. This is happening right now on this quarter. What a coincidence. Therefore, I'm not very much concerned about productivity. Quite the opposite. Doing these frozen goods plant, it's very good news. Most of those who have frozen good plants, they won't meet the new International requirements and this is what's being demanded by most customers. And we're overwhelmed, we've got to produce more and we will sell it indefinitely. And we're trying to send personnel from Spain, but the visa situation is very thorny at the moment in the U.S. It's more than -- more than productivity, it's a matter of timing. I have a cutting-edge plan, another cutting-edge plan in Thailand and India that we haven't finished yet. They are extraordinary or they will be extraordinary. In terms of advertising, your question was?

[Unknown Analyst]

On the second half of the year, will these affect the pasta area or the rice area?

[Antonio Hernández Callejas, Chairman of the Board & CEO]

Last year, Q1 experienced major advertising expenses because of the launching of American Beauty in the U.S., which is not going to affect us this year. We are not going to spend any single penny in American Beauty. We will just support a few dollars in certain brands on the second quarter. Greater advertising in pasta than in rice, and I don't think this is going to change. This is also a matter of timing. Q1 is very much leveraged on promotions at retailers than advertising. You've got to be there. If you lose promotions then you lose the sales.

[Unknown Analyst]

I have several questions. Firstly, I would like to understand the rice sales growing by 3%. The currency effect was massive. Would we talk about 8% growth, excluding FX? Is there a change in the scope of consolidation? Any volumes that are hidden, I don't understand?

[Unknown Executive]

[indiscernible] I'm going to answer that. It is almost 8%. Basmati prices have gone up, but the biggest impact will take place in the second quarter, third quarter. The price increase of rice has an impact on sales prices, and it has a major influence because the price of brands take longer. The industrial prices are rocketing and are growing faster. There may be less margin.

[Antonio Hernández Callejas, Chairman of the Board & CEO]

Can I respond on this part?

[Unknown Executive]

Okay.

[Antonio Hernández Callejas, Chairman of the Board & CEO]

And that's the harsh reality. And some products we transferred within 30, 60 days. But when it comes to focusing on retailers, since you announced the fee, and they say, "No one in the competition is daring to do this," well, it's almost 6 months.

[Unknown Analyst]

So part of this price increase in rice has been accounted for on Q1 already?

[Antonio Hernández Callejas, Chairman of the Board & CEO]

Yes, but they contribute with less margin. Secondly -- well, don't forget that this quarter, there has been a change in the scope of consolidation because of...

[Unknown Analyst]

The Geovita business? Or how much does it account for? What, EUR 20 million this quarter?

[Unknown Executive]

I'm not sure. I don't have this figure on top of my mind.

[Unknown Analyst]

If you can tell us this information afterwards, that would be lovely.

[Unknown Analyst]

There is a price increase with regards to aromatic and other things on the commodities side. As far as advertising and promotion is concerned, I remember a few years ago when you had to increase your advertising cost because the brands were a bit outdated, let's say, so -- especially in the U.S. My question is, is this really incompatible? I mean, aren't we talking about completely different beasts depending on advertising and promotions?

[Unknown Executive]

It depends on what they do in the competition. When they don't do advertising, they leverage themselves on promotions. The bad thing is for the competition to do both things at once. At the moment, we're living a period in which everyone focuses on the retailers rather than advertising except in certain launches, key launches. The maintenance advertising or branding remains quite replaced by specific flagship campaigns to support certain products, product launches. Usually, by the month of January -- well, January, not a lot of advertising is done. And last time, we coincided with a specific launch of another brand because before the Christmas holidays, we had elections in the U.S. and then we had a Christmas effect, and then the polls. And so we transferred advertising from Q4 to first quarter. And then the elections in November, a horrible timing to advertise anything on telly because it was very expensive, honestly.

[Unknown Analyst]

And going back to raw materials, rice. We were talking about pesticides in the European Union. It seems that -- is there price inflation still as a consequence of these pesticides?

[Unknown Executive]

No. The problem in the European Union is nothing. EBITDA for rice regarding the previous year, we experienced an all-time high, is exactly the same.

[Unknown Analyst]

Didn't you have inflation of raw materials?

[Unknown Executive]

That's what I was trying to explain. In rice, just like the best quarter of history. Pasta in Europe, almost just like the best quarter with a slight downward deviation of -- because of the Garofalo introduction cost, growing in pasta in the U.S. However, we have a EUR 15 million, minus EUR 3.5 million in FX terms, mainly because of the rice in the U.S.A., that's the balance. And in France also, we could be much better, but we are currently digesting the Roland Monterrat, the sandwich company. That won't deliver an EBITDA. [The gentleman, the analyst asked a question off the mic and the Chairman said] I'm not going to answer this question.

[Unknown Analyst]

Now you've got some capital gains on the first quarter, so why is this?

[Unknown Executive]

Last year, we sold the Houston facility, and we've had to recognize some capital gains and all the...

[Unknown Analyst]

Is this real estate related?

[Unknown Executive]

Well, there is a lot of them -- of those. Apart from the sandwich company, it's insignificant because they are in the pâté and sandwich business. We are trying to transform the sandwich business into a more sophisticated snack business. On Q1, the EBITDA result was negative, although by year-end, we expected to have a much more positive EBITDA, and this is what we will see afterwards, we believe. More than EUR 0.5 million in negative EBITDA, although with a very positive outlook for the rest of the year.

[Unknown Analyst]

Can you briefly explain the market share recovery of pasta in the U.S.? What have you done? How do you see the markets in the short run? Additionally, what do you think about the recovery of profitability of the pasta business in the U.S. in the short run?

[Unknown Executive]

That's something we are trying to work on. The loss of profitability in the group in the U.S. was partly triggered by the fact that the most profitable business we have, the health and wellness pasta, has gone down. In the U.S., everything in the pasta was a big problem like the whole grain pasta, and so on, has lost. We had very good brands in that segment, and whole foods have lost, whole grain pasta. Don't confuse this with the Amazon concept. It is losing value. The whole grain pasta business is losing value. You may think differently. What's growing, it's core business and the pleasure products, however, the health and wellness has gone down, is very much focused on Gluten Free and organic. We are there, we are present, however, not sufficiently, strongly in order to replace smart vegetable [ ones ]. And these things happen. These are trends. However, we're growing. Again, in all the brands we're all -- we're experiencing an overall recovery. We are the only ones growing on this first quarter because the competition is declining, and the white label as well and some of our most profitable brands are the ones that are experiencing greater growth.

[Unknown Analyst]

It's good to see that we are not going down, we're picking up. Are we going to catch up with the previous results?

[Unknown Executive]

We don't know yet. It remains to be seen. I'm quite optimistic though. We're right on track on recovery, to recover the market share of pasta U.S.A. and the profitability of the market. I also believe that everyone has reflected about this and about the value distraction.

[Unknown Analyst]

Is this going to be Olivieri's year?

[Unknown Executive]

Yes, indeed. It's going to be a big year for Olivieri, I'm not sure about profitability, but first of all, on the first quarter, we've increased our sales by 8%, thus increasing our market share to 48.1%, and we are the key leaders in [indiscernible] by far. So it can be a turning point here for Olivieri. Bertagni adds a lot of synergies. With a strong knowhow and expertise, it can grasp its entire potential with a 48% market share, although it is a country where the remaining amount is private label in a very harsh environment with a war between 2 large distributors and retailers. It can be a good year for Olivieri.

[Unknown Executive]

Any other questions?

[Unknown Analyst]

Can you give us some information -- Thailand, Indian plants and some productivity initiatives and the potential impact on the second half of the year's EBITDA?

[Unknown Executive]

The one in the Thailand, I must say, will have a limited impact because the harvest was in -- would be in December. By the time it comes in December, we'll be fully prepared. But for the time being, it will have a very short impact. It is a new plant in order to have greater volume and conditions with very interesting clients. In Thailand, on the other hand -- no, sorry, [says the speaker], in India, on the other hand, we have focused on the Indian market with a major contribution already. From 2019 onwards, we will be the first company with a -- an Indian pasta market. We are importing pasta from Italy from our subsidiaries. And going forward, we think that our goal is to grow in the pasta business in India.

[Unknown Analyst]

Basmati?

[Unknown Executive]

Well, basmati has a lot of problems. We will detect it.

[Unknown Analyst]

With regards to pesticides, waste?

[Unknown Executive]

Well, we are very well equipped. We've engaged in some sustainability programs, and a lot of farmers are engaged in these new programs. We support them with a subsidy to the use of certain less pesticide-intensive way, using less pesticides really. And we're carefully selecting raw materials in order to allow us to identify several batches of product that can be reused pursuant to, well, the market conditions. Not all the countries have those restrictions or tolerance. The European Union is the king of intolerance. You can't import anything that has more than a 0.001 parts per million in pesticides. It is 1% in the U.S. It is 3% in Japan. So we are trying to classify the potential supply based on the potential uses. Our lab in India is the best one, which allows us to have a strong capacity doing selection, which others can't do; unless they are at state. I believe the sales in India will have a very promising year. We've got open contracts for the rest of the period in India.

[Unknown Analyst]

I also have an additional long-term question. Inflation is going to remain high for quite some time, prices will go up.

[Unknown Executive]

Inflation of raw materials?

[Unknown Analyst]

No, inflation in general.

[Unknown Executive]

Logistics, personnel, there are many areas in the world ..

[Unknown Analyst]

A company like Ebro finds it difficult to pass on these prices to consumers, to clients. Do you anticipate lower margins and profitability going forward? So it's not only one-offs that we've discussed.

[Unknown Executive]

I disagree with you. We are the fastest in increasing prices. So we have a key differential edge. It takes us only 2 months when it takes others 2 years -- 3 or 4 months. I mean, that shows you how brilliant we are in Ebro Foods, leading change processes, benefiting ourselves with margins, that's having a very strong edge against the competition. It takes others 1 year, let's say. And I think this is a very positive effect, not a negative one, at all.

[Unknown Analyst]

Do you expect to recover any margins or profitability?

[Unknown Executive]

Of course. The Q1 problem, if we compare it with the best quarter of the company, was exclusively related to one of our markets. And will we reflect all this margins of the U.S. in the second quarter or the third quarter? By year-end, we will fully recover everything and catch up. The last month, March, was much better than January and February. Things seem to go on a good direction today. I think we are going to recover margins compared with the best period in history. We've lost EUR 15 million in EBITDA, but if you do the qualitative analysis, it's a completely different interpretation. If you just focus on the quantities, obviously, it's different. But if you focus on quality, what a positive result. Any other questions? Well, thank you very much, indeed. Goodbye.