Q1 2025 Grupo Bimbo SAB de CV Earnings Call

Operator: Good day and welcome to the first quarter 25 Grupo Bimbo results and conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Good day and welcome to the first quarter 'twenty, five Grupo Bimbo results and conference call.

All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the stock Ebola Buzzy right. After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Please note this event is being recorded.

Rafael Pamias: I would now like to hand the conference over to Rafael Pamias, CEO of Grupo Bimbo. Please go ahead. Good afternoon, everyone. Thank you for joining us. Connected on the line today are our CFO Diego Vajiola, Executive Vice President Mark Bendix, along with several members of our finance team. We kicked off 2025 with solid trends in most markets and facing some challenges and areas of opportunity in others. While navigating highly volatile macroeconomic and political landscapes Despite these hurdles, our exceptional diversification and global presence enable us to achieve record-breaking sales in the first quarter at a consolidated level, and for Mexico and EAA as well, which led to positive volume contributions on a global basis.

Speaker Change: I would now like to hand, the conference over to Raphael Pardon me I see a group I've been by please go ahead.

Speaker Change: Good afternoon, everyone. Thank you for joining us connected on the line today, our CFO Diego Osceola Executive Vice President and might appendix along with several members of our finance teams.

Speaker Change: We kicked off 2025 with solid trends in most markets and facing some challenges in areas of opportunity and others, while navigating highly volatile macroeconomic and political landscapes.

Speaker Change: In the world's leading economies.

Speaker Change: Despite these hurdles or exceptional diversification and global presence will enable us to achieve record breaking sales in the first quarter at a consolidated level and for Mexico on EAA, as well, which led to positive volume contribution.

Speaker Change: The global basis.

Rafael Pamias: Furthermore, we experienced a high single-digit growth in EBITDA, and in our most profitable region, Mexico, we reached a 19% EBITDA margin, showcasing the remarkable strength and unwavering commitment of our frontline teams. We're also pleased to report that the continued positive evolution in Latin America led us to achieve a 50 basis points increase in EBITDA. As a baking industry leader and relevant player in snacks, our continued success is built on innovation, operational excellence, and our commitment to meet customers and consumers' needs across all markets. We remain confident in our ability to fire up sales volume everywhere and drive long-term value.

Speaker Change: Furthermore, we experienced a high single digit growth in EBITDA.

Speaker Change: And in our most profitable region, Mexico, we reached a 19% EBITDA margin showcasing the remarkable strength and unwavering commitment, although our frontline teams, but also pleased to report that the continued positive evolution in Latin America led us to achieve a 50 basis point increase in EBITDA.

Speaker Change: As a baking industry leader and relevant player in snacks. Our continued success is built on innovation operational excellence and our commitment to meet customers on consumers' needs across all markets. We remain confident in our ability to fire up sales volume everywhere and drive long term.

Speaker Change: And value.

Rafael Pamias: on our ESG journey. I am proud to share that we have been named one of the world's most ethical companies for the NINJA. consecutive year. Also, 45% of our sales meet or exceed the 3.5-star benchmark under the Health Star Rating System, demonstrating optimal nutritional quality and delivering positive nutrition in every bite.

Speaker Change: Our ESG journey I am proud to share that we have been named one of the world's most ethical companies for the NIM.

Speaker Change: <unk> yeah.

Speaker Change: Also 45% of our sales meet or exceed the 3.5 to start benchmark under the held the star rating system, demonstrating optimal nutritional quality of delivering positive nutrition and everybody.

Rafael Pamias: Now looking into the results by region. In Mexico, sales improved by nearly 2%, mainly due to the positive mixed effect. We are encouraged by the resilience of our business and its continued ability to generate value in a challenging environment. The expansion of our margins under these conditions highlights the strength and flexibility of our operating model, reaching a record high of 19 percent, driven by a favorable mix, lower commodity costs, and disciplined control of administrative expenses. Despite the slowdown in the consumer, we have maintained a strategic investment approach throughout the period, positioning the business for sustainable long-term growth.

Speaker Change: Now looking into the results by region in Mexico sales improved by nearly 2% mainly due to the positive mix effect.

Speaker Change: My day sequential softening in the consumption environment, we continue to see growth across most channels and geographies.

Speaker Change: Excuse me with particularly strong performance in buns and rolls sweet baked goods cookies officemax.

Speaker Change: We are encouraged by the resilience of our business and its continued ability to generate value in a challenging environment. The.

Speaker Change: The expansion of our margins under these conditions highlights the strength and flexibility of our operating model, reaching a record high of 19% driven by a favorable mix.

Speaker Change: Lower commodity costs and disciplined control of administrative expenses.

Speaker Change: Despite the slowdown in the consumer we have maintain a strategic investment approach throughout the period positioning the business for sustainable long term growth.

Rafael Pamias: In North America, excluding the FX effect, sales decreased 4.9% due to an industry-wide self-consumption environment in the US, where consumers continue to seek pricing and value. We're also lapping the impact of last year's strategic exits from certain non-branded titles. We remain focused on enhancing our revenue growth management strategy and strengthening our overall value proposition with innovation efforts closely aligned to the needs of key consumer demographics. We have recently launched a price-value portfolio in the bread category to proactively address the slowdown in consumption trends through targeted and decisive strategies, while continuing to drive growth in artisanal breads.

Speaker Change: In North America, excluding the FX effect sales decreased four 9% due to an industry wide soft consumption environment in the U S where consumers continue to seek pricing and value. We're also lapping the impact of last year's as strategic exits from certain non branded science.

Speaker Change: We remain focused on enhancing our revenue growth management strategy and strengthening our overall value proposition with innovation efforts closely aligned to the needs of key consumer demographics. We have recently launched a praise value portfolio in the bread category to proactively address the slowdown in pumps.

Speaker Change: Samsung trends through targeted and besides these strategies, while continuing to drive growth in our case.

Rafael Pamias: At the same time, We are maintaining our market share across sweet baked goods, pans and rolls, and snacks, reflecting the resilience and competitiveness of our portfolio. Additionally, we're actively broadening our distribution footprint to meet consumers where they shop, leveraging channel-specific price pack architectures to deliver compelling value across the board. On the other hand, in Canada, we saw a good performance where we had shared gains in bread, sweet baked goods, and snacks. Despite lower commodity cost and productivity gains, our adjusted EBITDA margin contracted by 130 basis points. This was primarily due to the soft stock line performance and the continued strategic investment in the transformation project aimed at optimizing our go-to-market capabilities in the long term and increasing saturation with improved execution to enable growth as we serve more effectively our customers and consumers.

Brett: As you know Brett.

Brett: The same time we.

Brett: We are maintaining our market share across sweet baked goods bonds, unroll, China snacks, reflecting the resilience and competitiveness of our portfolio.

Brett: Additionally, we are actively broadening our distribution footprint to meet consumers, where they shop leveraging channel the specific price pack architectures to deliver compelling value across the board.

Brett: On the other hand in Canada, we saw a good performance, where we had share gains in bread sweet baked goods and snacks.

Brett: Despite lower commodity cost and productivity gains our adjusted EBITDA margin contracted by 130 basis points. This was primarily due to the soft top line performance and the continued strategic investments in the transformation project aimed at optimizing our go to market capabilities and the long term.

Brett: And increasing saturation with improved execution to enable growth how do we serve more effectively our customers and consumers.

Rafael Pamias: Moving forward, we will remain focused on proactively seeking opportunities to improve productivity, expand distribution, and grow market share by connecting with consumers at every shopping opportunity.

Brett: Moving forward, we will remain focused on proactively seeking opportunities to improve productivity.

Brett: <unk> distribution and grow market share by connecting with consumers at every shopping opportunity.

Rafael Pamias: Moving on to Latin America. Excluding FXFX, net sales increased 5.2%, mainly because of strong trends across the region, highlighting double visit rates in Brazil and the Latin Sur division, as well as solid growth in the Central America region. Argentina continues to deliver strong sales growth. Chile and Colombia confirmed the changing trend seen in the back half of 2024 due to our ability to quickly implement an effective revenue growth management strategy. As a result, adjusted EBITDA margin, expanded 50 basis points. The acquisitions of Pañifica and La Zarzereña also contributed to the inorganic growth of the region.

Brett: Moving on to Latin America <unk>.

Brett: Excluding FX effects net sales increased five 2%, mainly because of the strong trends across the region highlighting double digit rates in Brazil, and the Latin Shaw division as well as solid growth in the Central America region.

Brett: Argentina continues to deliver strong sales growth in Chile, and Colombia confirmed the change in trend seen in the back half of 'twenty 'twenty four due to our ability to quickly implement an effective revenue growth management strategy.

Brett: As a result, adjusted EBITDA margin expanded 50 basis points yet.

Brett: The acquisitions of and if you kind of left her tenure also contributed to the inorganic growth of the region.

Rafael Pamias: Please be advised that we are still waiting for the authorization of the acquisition of Wikibold in Brazil, which we expect in the second half of the year. In Europe, Asia, and Africa, excluding effect-to-effect, sales increased 4.5%, this was mainly due to growth in Romania, Bimbo QSR, the UK, India, and Morocco, and the inorganic contribution from the acquisitions we completed in the last 12 months. The adjusted EBITDA margin of 17.2% remained unchanged from Q1 2024, supported by strong sales performance and lower cost of sales. However, these positive effects were mostly upset by the impact of the minimum wage increases and the phase-out of wage subsidies in Romania and weaker results in our branded business in China.

Brett: Please be advised that we're still waiting for the authorization of the acquisition of wiki bolt in Brazil, which we expect in the second half of the year.

Brett: In Europe, Asia, and Africa, excluding FX effect sales increased four 5%. This was mainly due to growth in Romania being booked.

Brett: The U K, India and Morocco.

Brett: Inorganic contribution from the acquisitions, we completed in the last 12 months, including travel Daddy in Romania, and Poland All in Tunisia.

Brett: The adjusted EBITDA margin of seven.

Brett: 2% remained unchanged from Q1, 'twenty 'twenty four supported by a strong sales performance and lower cost of sales.

Brett: However, these positive effects were mostly offset by the impact of the minimum wage increases and the phase out of wage subsidies in Romania and weaker results in our branded business in China.

Rafael Pamias: In this region, we are also pending the acquisition of Don Don in the Balkans, which we expect to complete in the next month.

Brett: In this region were also pending the acquisition of Don Don in the Balkans, which we expect to complete in the next month.

Rafael Pamias: Earlier today, we closed the acquisition of Caramolegos Bakery in Romania, one of the country's leading baking brands in the retail channel, which enhances our presence and enables us to further grow in this category.

Brett: Yeah.

Brett: Earlier today, we closed the acquisition of cut them of Legos bakery in Romania, one of the country's leading baking brands in the retail channel we.

Brett: Which enhances our presence and enables us to further grow in this category.

Diego Vajiola: With this, I would now like to turn over the call to Diego, who will walk you through our financials. Adelante, Diego. Thank you, Rafa. Good afternoon, everyone, and thank you for joining us today. After 15 years of dedicated service at Grupo Bimbo and six years in the Investor Relations Team.

Brett: With this I would now like to turn over the call to Diego, who will walk you through our financials.

Diego: Good afternoon, everyone and thank you for joining us today.

Diego: After 15 years of dedicated service of Grupo Bimbo, and six years in the investor relation team.

Diego Vajiola: Pauline on the rear will be leaving. We are deeply grateful for her valuable contributions and unwavering commitment throughout her time with us. We wish Pau all the best in her future.

Diego: He will be leaving the company.

Speaker Change: We are deeply grateful for her valuable contributions on the laser and commitment throughout her time with us.

Diego: Wish Bob all the risks in your future endeavors.

Diego Vajiola: Now, moving into our quarterly results. We saw notable performance across three regions this quarter, with net sales reaching historic levels for our first quarter. This success was driven by our focus on innovation, productivity, and engaging both customers and consumers throughout most regions. As anticipated and shared during our last earnings call, our EBITDA margin contracted due to the challenging environment in North America and the continued strategic investments we're making to transform the business. As we navigate through this volatile year, we remain confident in our ability to deliver value to our shareholders in the long term.

Speaker Change: Now moving to our quarterly results.

Speaker Change: We saw a lot of work performance across these regions this quarter with net sales, reaching historic levels for our first quarter.

Speaker Change: This success was driven by our focus on innovation.

Speaker Change: The activity and engaging both customers and consumers throughout most regions.

Speaker Change: Dissipated shares during our last earnings call, our EBITDA margin contracted due to the challenging environment in North America and the continued strategy.

The investments, we're making to transform the business.

Speaker Change: As we navigate through these volatile year, we remain confident even though where our ability to deliver value to our shareholders in the long term.

Diego Vajiola: I would like to dive deeper into our IVIDA model. Regarding the same exchange rate weighted by region, given the evaluation of the Mexican peso. and considering that Mexico is our most profitable region. This has a negative impact in our regional needs. resulting in a consolidated margin dilution from this business mix effect of approximately 40 days.

Speaker Change: I'd like to dive deeper into our EBITDA margin.

Speaker Change: Regarding the same exchange rate weighted by region, given the devaluation of the Mexican peso.

Speaker Change: Considering the Mexico with our most profitable region.

Speaker Change: This has a negative impact you know where regional mix.

Speaker Change: Salting in a consolidated margin dilution from these business mix effect of approximately 40 basis points.

Diego Vajiola: for our Capital Allocation Strategy. We executed approximately 260. Million Donors in CapEx during the quarter. which is 20% lower versus the first quarter of clinical. We generated almost 1 billion pesos on working capital. This improvement is related to our continuous implementation of projects to optimize. working capital in all our jobs. Our total debt close at $161 billion. This 10 billion pesos increase when compared to 24 was because of the two trans-Mexican bonds we issued early in the year for 15 billion. And we reported the same MEDTEC to adjusted T-data ratio as we did at the end of 2024 of 2.9.

Speaker Change: As for our capital allocation strategy, we executed approximately 206 feet.

Speaker Change: Millions of dollars in Capex during the clutter.

Speaker Change: Which is 20% lower versus the first quarter of 'twenty 'twenty four.

Speaker Change: We generated almost 1 billion pesos or working capital.

Speaker Change: This improvement is related to our continuous implementation of project to optimize.

Speaker Change: Working capital in all our geographies.

Speaker Change: Our total debt closer to hold around 61 billion pesos.

Speaker Change: These 10 billion pesos increase when compared to 24.

Speaker Change: Because of the two French Mexican bonds, we issued early in the year for 15 billion pesos.

Speaker Change: And we reported the same net debt to adjusted EBITDA ratio as we did at the end of 'twenty 'twenty four of 295.

Diego Vajiola: Reflecting our discipline approach to financial management, we remain focused on navigating macroeconomic challenges with proven. We have as a priority the operational efficiency. because discipline and strategic resources allocation to project margins and drive long-term value. Our strong financial foundation positions us to adapt to changing market conditions. while continuing to invest in growth. We also maintain a solid liquidity position. supported by our fully available, almost $2 billion committed revolving credit.

Speaker Change: Reflecting our disciplined approach to financial management, we remain focused on navigating macroeconomic challenges with proven.

Speaker Change: Despite external pressures.

Speaker Change: Carlos a priority the operational efficiency.

Speaker Change: Cost discipline and strategic resources allocation to project margins and drive long term value.

Speaker Change: Our strong financial foundation positions us to adapt to changing market conditions, while continuing to invest in growth.

Speaker Change: We also maintain a strong liquidity liquidity position.

Posted by Yeah, we're fully available almost $2 billion committed revolving credit facility.

Diego Vajiola: As discussed during our last learning call, we expect the first half of the year to remain challenging. driven by continued investments in our North America Transformation Project. and persistent pressure on the region's consumer environment. It's important to note that the bulk of these investments began in the third quarter of 2024. creating a difficult year-over-year comparison for this semester. And we are already seeing a sequential improvement, as we expected, of 150 basis points when compared with the fourth quarter of 2020.

Speaker Change: As discussed during our last earnings call.

Speaker Change: We expect the first half of the year to remain challenging.

Speaker Change: Driven by continued investments in our North America transformation project.

Speaker Change: Persistent pressure on the region consumer environment.

Speaker Change: It's important to note that the bulk of these investments.

Speaker Change: In the third quarter of 2024.

Speaker Change: Creating a difficult year over year comparison or disease for Mr.

Speaker Change: And we have already seen a sequential improvement as we expected of corporates and 50 basis points when compared with the fourth quarter of 2024.

Speaker Change: We do anticipate.

Diego Vajiola: I would like to start by saying that we have seen a gradual improvement in the second half as we begin to realize early benefits from the transformation project, so we feel confident that we will be able to deliver an area of growth in the second half of the year.

Speaker Change: A gradual improvement in the second half as we begin to realize benefits from the transformation program. So.

So we feel confident that we will be able to de lever and there is a growth in the second half of the year.

Speaker Change: To conclude.

Diego Vajiola: We are revising our 40-year date. We now anticipate a stronger test. versus the 21 pesos previously expected. These 50 cents adjustments represent 2 percentage points of growth. on a yearly basis for Grupo Bimbo. We also expect a softer than anticipated consumption environment in North America. As a result, we're making corresponding adjustments to our outlook for the year. We now expect a high single-digit growth rate. from the previous low double-digit growth. And for our adjusted TBDAP, we expect it to grow at a mid-single-digit rate. Consequently, we are expecting a slight margin contraction. as compared to last year.

Speaker Change: We are revising our full year guidance.

Speaker Change: We now anticipate.

Speaker Change: A stronger peso.

Speaker Change: 20 vessels and 50 cents there soon.

Speaker Change: One pesos previously expected.

Speaker Change: These 50 cents adjust.

Speaker Change: The adjustment represents two percentage points of growth.

Speaker Change: Nearly races for Grupo Rede.

Speaker Change: And thankfully.

Speaker Change: We also expect a softer than anticipated consumption environment in North America.

Speaker Change: As a result, we're making corresponding adjustments to our outlook for the year.

Speaker Change: For sales.

Speaker Change: We now expect a high single digit growth rate.

Speaker Change: From the previous low double digit growth rate.

Speaker Change: For our adjusted EBITDA.

Speaker Change: We expect it to grow at a mid single digit range.

Speaker Change: So sequentially, we are expecting consequently, we're expecting a slight margin contractual.

Speaker Change: As compared to last year.

Diego Vajiola: While this is shaping up to be a challenging year, challenging year with many moving parts and ongoing uncertainty in the macroeconomic environment of key markets. We remain confident in our long-term strategy. and a leader in our industry, we are well-positioned to navigate this headline. We are committed to continue to invest in our business. driving growth and creating sustainable value for our state.

Speaker Change: While this is shaping up to be a challenging year challenging year with many moving parts and ongoing uncertainty in the macroeconomic environment of key markets.

Speaker Change: We remain confident in our long term strategy.

Speaker Change: As a highly diversified global company.

Speaker Change: The leader in our industry.

Speaker Change: We are well positioned to navigate these headwinds.

Speaker Change: We are committed to continue to invest in our business.

Speaker Change: Driving growth and creating sustainable value for all our stakeholders.

Operator: We can now proceed with the Q&A session, so please go ahead. Thank you.

Speaker Change: We can now proceed with the Q&A session. So please go ahead.

Speaker Change: Yeah.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the case if at any time. Your question has been addressed I mean, we'd like to withdraw your question. Please press Star then two.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker Change: This time, we will pause momentarily to assemble our roster.

Inara Cabral: Your first question comes from Inara Cabral from Citibank. Please go ahead. Hello, everyone. Thank you so much for taking my question. I have two here. So the first one would be if you could give us some color about the early benefits that you are already having on the investments that you have made in the US. As we saw here on the release, would really be helpful to us. And my second question is regarding the revising guidance. Can you give some color on what is the main impact you are seeing, other than the effects, for instance, if you are seeing with this new scenario in the globe with tariffs, a lower consumption environment that you are educated, but also some change in terms of commodities prices or any different fronts on the consumption behavior regarding some specific products, continuous change to private labor, or something like that would also be really helpful.

Speaker Change: Your first question comes from Renata <unk> from Citibank.

Speaker Change: Please go ahead.

Renata: Hello, everyone. Thank you so much for taking my question I have two here.

Speaker Change: So the first one.

Speaker Change: With me if you could give us some some color about the early benefits that you were at hobby.

Speaker Change: They have asked me that you haven't.

Speaker Change: Have you made any less as we saw here David East would really be helpful to us and my second question is regarding the revised.

Revising guidance.

Speaker Change: Can you give some color on what.

Speaker Change: Is it the.

Speaker Change: Let me ask you where see our authors and experts.

Speaker Change: Explain if you are seeing with these new scenario in the globe of which carries a lower consumption environment that you already did but also some teams need to himself the whole module prices or E any differing from Sunday consumption.

Speaker Change: Behavior regarding some specific products.

Speaker Change: <unk> continued to change the private label or something like that would also be really helpful. Thanks. So much.

Inara Cabral: Thanks so much. Okay.

Mark Bendix: Renata, this is Mark Bendix from North America, and I'll answer your question first on... our transformational program in North America. We are optimizing and integrating all aspects of our business in North America. That includes our people, our processes, our technologies, and our systems to reach our full potential. We're refining and implementing new capabilities and technologies and processes. We are aimed at growing our customer base across all major channels. and we're investing in world-class operational efficiency. A transformation remains aligned with our long-term expectations. and we will be experiencing increasing sequential benefits as we progress towards the long-term goals.

Speaker Change: Okay.

This is mark <unk> from North America.

Speaker Change: Oh.

Speaker Change: That's your question first on.

Speaker Change: Our transformational program in North America.

Speaker Change: We are optimizing.

Speaker Change: Optimizing and integrating all aspects of our business in North America that includes our people our.

Speaker Change: Processes technologies, and our systems to reach our full potential.

Speaker Change: We're refining and implementing new capabilities and technologies and processes.

Speaker Change: We are aimed at growing our customer base across all major channels.

Speaker Change: And we're investing in world class operational efficiency.

Speaker Change: A transformation.

Speaker Change: It is aligned with our long term expectations.

Speaker Change: And.

Speaker Change: We will be experiencing increasing sequential benefits as we progress towards the long term goals and this is this.

Mark Bendix: And this is a multi-year plan, Renata, so we're going to see benefits in three to four years across that same area. We have a strategic focus on continuing to expand our offerings to the right value propositions across North America that meet all of consumers' and customers' needs and categories and channels, ensuring we have the right product to meet where they shop. And then from a productivity, our productivity target for 2025 is a record for us, and it's on track. It's driven by automation, route optimization, and digital tools, including warehouse management systems and adaptation in our bakeries to drive efficiency.

Speaker Change: This is a multiyear plan for another so we're gonna see.

Speaker Change: Benefits.

Speaker Change: Three to four years across that same same Meredith.

Speaker Change: We have a strategic focus on continuing to expand our offerings to the right value propositions across North America that meet all of consumers.

Speaker Change: Customers means in categories and channels, ensuring we have the right product to meet where they shop.

Speaker Change: And then from a productivity our productivity target for 2025 is a record for us and it's on track and it's driven by automation route optimization, and digital tools, and Claire, including warehouse management systems and adaptation and our bakeries to drive efficiency.

Mark Bendix: We're continuing to minimize waste, we're increasing labor efficiencies, and our EBITDA growth is a clear priority for us. All in all, we're changing the ways we're working through a dedicated execution engine operating on a weekly cadence with clear accountability across the full P&L for North America.

And to minimize waste.

Speaker Change: Increasing labor efficiencies.

Speaker Change: Our EBITDA growth is a clear priority for us.

Speaker Change: No.

Speaker Change: All in all we're changing the ways, we're working through a dedicated execution engine.

Speaker Change: Operating on a weekly cadence with clear accountabilities across the full P&L for North America.

Diego Vajiola: Diego, I'll let you talk about the next question. Thank you, Mark.

Speaker Change: Yeah I go I'll, let you talk about the next question.

Mark: Sure. Thank you Mark.

Diego Vajiola: Hi, Renata. Well, first of all, let me tell you that considering the actual tariff. The majority of the probes that we export to the U.S. from Mexico The smaller adjustments to the guidance from the expectation of the environment that we're seeing in the U.S. more based on what we are seeing today.

Speaker Change: Uh huh.

Speaker Change: First of all let me tell you that considering the actual carries.

Speaker Change: Direct impact.

Speaker Change: He is not material for group will be.

The majority of the probes that we export to the U S for Mexico.

Speaker Change: Not have any impact from the current 30, they are within the framework of the U S. M P.

Speaker Change: The smaller adjustments.

Speaker Change: Regarding events.

Speaker Change: The expectation of the environment that we're seeing in the U S.

Speaker Change: It's more based on what we are seeing to date I think that the vehicle know remains how overall target.

Diego Vajiola: I think that the big unknown remains how overall tariff might have an impact on inflation. And as a consequence of a higher inflation, then consumption, disposable income for consumers, and if there can be a change on consumer habits and behavior. But today, I would say that it is still early to tell.

Speaker Change: How about an impact on inflation.

Speaker Change: And as a consequence of the higher inflation than consumption disposable income for consumers on these there can be a change in consumer habits and behaviors.

Speaker Change: Today I would tell you that it's still early to tell.

Inara Cabral: So just to be very clear, we're not assuming any incremental impact of tariffs in the existing guidance, knowing that it is a risk that we face. That's super helpful. Thanks so much for the caller. Thank you.

Speaker Change: So you have to be very clear, we're not assuming any incremental impact of tariffs in the existing guidance, knowing that EV salaries that we face to face.

Speaker Change: That's super helpful. Thanks, so much for the color.

Speaker Change: Thank you. Your next question comes from Antonio Fernandez for October.

Antonio Fernandez: Your next question comes from Antonio Fernandez from Oxnard. Please go ahead. Hi, thanks for taking the question. Just wanted to see if you could provide a little bit more color on consumption trends, but in Mexico. I mean, you've provided a little bit more light on North America, but what about Mexico? Where do you see maybe some pressure from a category standpoint? And if you saw any improvement throughout the quarter, or was it soft overall? Of course, this all excluding calendar headwinds. Thanks.

Speaker Change: Please go ahead.

Antonio Fernandez: Hi, Thanks for taking the question just wanted to see if you prefer more colour on consumption trends bode in Mexico.

Antonio Fernandez: Further even more light on the North America, what about Mexico, where do you see maybe some ratio for Macau. They are kind of already standpoint, and if you saw any improvement throughout the quarter for seat. So overall of course be sold excluding covering about two weeks.

Antonio Fernandez: Yes, hello, how are you doing? We have witnessed some softness in consumption coming mostly from the convenient challenge. Despite that, we're still seeing a resilient consumer in Mexico. with the retail and traditional channels showing favorable trends and convenience showing signs of recovery in April. We feel that we're going to be seeing a soft volume. But for us, there is a space to accelerate our portfolio. On one side, we have the ability to adapt our portfolio to accommodate to price value offerings. and also we have identified enough opportunities in Mexico in key occasions, growing needs. of the country.

Speaker Change: Yes, Hello, how are you doing.

Antonio Fernandez: We have witnessed some softness in consumption coming mostly from the convenient challenge.

Antonio Fernandez:

Antonio Fernandez: Despite that we're still seeing a resilient consumer in Mexico, with the retailer and traditional channels, showing a favorable trends and convenient showing signs of recovery in April.

Antonio Fernandez: We feel that we're gonna be seeing.

Antonio Fernandez: Soft volume.

Antonio Fernandez: But for US there is a space to accelerate our portfolio on on one site.

Antonio Fernandez: We have the ability to adapt our portfolio to accommodate two price value offerings.

Antonio Fernandez: And also we have identified enough opportunities in Mexico in key locations growing needs emerging channels and.

Antonio Fernandez: Areas of the country and in fact, if I may our strong position in Mexico, and the confidence of customers and consumers alike provide margin of maneuvering.

Antonio Fernandez: In fact, if I may, our strong position in Mexico and the confidence of customers and consumers alike provide margin of maneuvering to try to play the whole game. you know we are present in branded and unbranded, we are able to deliver competitive portfolio in every channel, category, occasion and need. Plus, we can even deliver fresh or frozen. proud to say that the Mexican teams also have an ability to adapt.

Antonio Fernandez: We'll try to play the whole field.

Antonio Fernandez: As you know we're present in branded and unbranded, we're able to deliver competitive portfolio in every channel category occasion, and need and plas, we couldn't even deliver fresh or frozen.

Antonio Fernandez: I'm proud to say that the Mexican teams also have an ability to adopt quite quickly. So all in all.

Antonio Fernandez: So all in all. we see a softer scenario, a resilient consumer. Okay. Thanks for the call. Have a nice rest of the day. Thank you.

Antonio Fernandez: We see a softer scenario, a resilient consumer and opportunities for us to try to beat.

Antonio Fernandez: Yeah.

Antonio Fernandez: The winter the winter sales.

Antonio Fernandez: And keep growing.

Antonio Fernandez: Okay. Thanks for the color colorless muscle very thanks.

Felipe Yukros: Your next question comes from Felipe Yukros from Scotiabank. Please go ahead. Thanks, operator. Good evening, Rafa, Diego, Mark and team. So, my first question is on North America. So, it looks like last quarter was the bottom for margins, as you guys have forecasted, and we did see some sequential improvement. Can you give us an idea of what the quarter was like, both in sales and EBITDA, if you adjust for the businesses that you exited and the transformation investments? We understand that consumption is weak in the U.S., but just trying to understand the magnitude of that impact, if possible.

Speaker Change: Thank you. Your next question comes from Philippe <unk> from Scotia Bank.

Speaker Change: Please go ahead.

Speaker Change: Thanks, operator, good evening.

Speaker Change: Mark and team.

Speaker Change: So my first question is on North America. So it looks like last quarter was the bottom for margins. Since you guys have you guys had forecasted.

Speaker Change: We did see some sequential improvement can you give us an idea of what the quarter was slight both in sales and EBITDA. If you adjust for the businesses that you exited in the transformation investments just like we understand the consumption was weak in the U S. But just trying to understand the magnitude of that impact as possible and then on.

Felipe Yukros: And then on EAA, the division had been coming in at around 10% due to the margins for the last three quarters, and it was slightly lower this quarter. I think you mentioned labor expenses in Romania as one of the main causes. Just wondering if there are other things in there, since you're still doing M&A and deals that you haven't closed, or if the majority came from that impact and whether we could assume that it's going to hit the rest of the year. Thank you.

Speaker Change: EAA the division has been coming in at around 10% EBITDA margins for the last three quarters.

Speaker Change: And it was slightly lower this quarter I think you mentioned labor expenses in Romania as one of the main causes just wondering if there are other things in there since you are still doing M&A and deals that you havent closed, whereas the majority came from from that impact and whether we can assume that it's going to hit the rest of the year. Thank you.

Speaker Change: Yeah.

Diego Vajiola: Yes, hi Felipe. This is Diego.

Speaker Change: Yes, Hi, Philippe is zero.

Diego Vajiola: On the North America question, unfortunately, we're not disclosing the specifics on the investments and the charges that we have on our results during the quarter. So, unfortunately, I'm not going to be able to provide any specific comment on the first. Regarding the EAA performance during the quarter, I would say that our margins in the region are sustainable and we believe that there is still room to continue to improve. Thank you. We have a lot of noise now, okay. So I was saying that the margins are sustainable and we continue to see a lot of room of improvement.

Speaker Change: Well, the North America Western them agree that Oh virtually were not disclosing the C peaks.

Speaker Change: The investment in some of the charges that we have on our.

Speaker Change: Results during the quarter. So unfortunately, I'm not going to be able to provide any specific.

Speaker Change: Specific commentary on the first question.

Speaker Change: Regarding the Yea performance look what I would say that the.

Speaker Change: Our emergency in the region are sustainable and we believe that there is still room to continue to improve.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Can you hear me.

Speaker Change: A lot of legs okay.

Speaker Change: So I would tell you that the margins are sustainable and we continued to see a lot of room of improvement.

Diego Vajiola: Now, unfortunately, during the beginning of the year, we started to see these two impacts, particularly in Romania. One that had to do with a very aggressive increase on the minimum salary of 17%. And the other is that- Sorry, I don't know what's going on with the noise. So we also lost. a benefit that subsidy that we were receiving and these two created some additional pressure that we feel very confident that we're going to be able to manage and to offset and of course continue growing and find the productivity that will offset this more in the short term as we say.

Speaker Change: Now Unfortunately.

Speaker Change: In the beginning of the year, we started to see these two impacts, particularly in Romania wound up has to do with a very aggressive increase or the minimum salary of 17%.

Speaker Change: The order is up.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Boy I don't know, what's going on with the largest so so we also lost.

Speaker Change:

Speaker Change: Are they indicate that the subsidy that we were receiving.

Speaker Change: And this to create.

Speaker Change: Some additional pressure.

Speaker Change: We feel very confident that we're going to be a warning.

Speaker Change: To manage them to offset them.

Speaker Change: Of course continue growing them find the productivity that will offset these more in the short term I would say so it is a region that we feel very optimistic to continue to see margin improvement.

Operator: So it is a region that we feel very optimistic to continue to see margin improvements as it has been the case in the last many quarters. Excuse me, can you hear me? Are we still connected? or connected. Yeah, we're working on it.

That's been the case in the in the last many creditors.

Speaker Change: Right.

Speaker Change: Excuse me.

Speaker Change: Can you hear me or are we still connected.

Speaker Change: Well, yeah, well connected right.

Speaker Change: Right.

Speaker Change: Well connected.

Speaker Change: Yeah, we're looking at it.

Speaker Change: When we brought in New York.

Operator: Operator, are you in the line? Yes.

Speaker Change: Operator are you in the line.

Speaker Change: Yeah, so without it so we can manage it ourselves.

Speaker Change: They need them.

Ben Tara: Probably the next question is from Ben from Barclays, I don't know Ben if you are unmuted or you can unmute yourself. Hi, thank you very much. It appears that it's been resolved on this end. I'll continue with the Q&A session. Thank you. Yes, please.

I believe the next question is from Ben from Barclays I don't know Ben if you are on mute.

Speaker Change: You cannot use yourself.

Speaker Change: We can't hear you.

Yes.

Speaker Change: Alright, Thank you very much the pace that it's been resolved on the same I'll continue with the Q&A session. Thank you.

Speaker Change: Yes. Please.

Ben Tara: Thank you. Your next question will be coming from Ben Tara from Barclays. Please go ahead.

Speaker Change: Thank you. Your next question will be coming from Ben <unk> from Barclays.

Speaker Change: Please go ahead.

Ben Tara: Trying this again, Diego, Rafa, can you hear me? Yes, we've done that. Okay. Fantastic. Yeah. A little bit of tech issues here, I guess.

Diego: Trying this again Diego Oh can you hear me.

Speaker Change: Yes with government.

Diego: Oh, Okay fantastic a little bit of tech issues here I guess.

Ben Tara: Just two quick ones. So number one, and thanks for giving already a little bit of detail as to the softness of the US consumer, but I wanted to understand, and maybe if you can help us dig a little bit deeper as to just the competitive dynamics, what you're seeing in the different categories in the US and how much of a pressure you've been getting from private label, just like general dynamics, and if you're seeing also significant swings from food service into retail, just like the general down-trading trends, and then I have a quick follow-up as well.

Diego: Just two quick ones, so number one and thanks for giving already a little bit of detail as to the softness of the U S consumer but wanted to understand and maybe if you can help us pick a little bit deeper as to just competitive dynamics, what youre seeing in the different categories in the U S and how much of a pressure youth.

Diego: Being getting.

Diego: From private label, just like General dynamics, and if you're seeing also significant springs from foodservice into retail just like the general down trading trends and then I have a quick follow up as well. Thank you.

Ben Tara: Thank you.

Mark Bendix: Okay, Ben, this is Mark. You're right. All the categories remain challenged in the U.S. What we're seeing is we're seeing a bifurcation of consumers where economically stressed consumers are moving down to private label or other value offerings, while more affluent customers, consumers are moving to more premium products. That challenge, as the largest player in the midstream or the mainstream, we have an oversized exposure to that largest segment of the category in the middle. which is where the bulk of the category declines are occurring right now. So Our business and momentum do not have sufficient size to offset those losses, but what we're focused on is expanding our value segment offerings.

Diego: Okay. Ben this is mark.

Ben: Youre right all the categories remain challenged and the challenges in the U S.

Ben: What we're seeing is we're seeing a bifurcation of consumers where economically stressed consumers are moving down to private label or other value offerings.

Ben: The more affluent customers consumers are moving to more premium products.

Ben: Challenge as the largest player in the midstream or the main stream, we have an oversized exposure to the largest segment of the category in the metal.

Ben: Which is where the bulk of the category declines are occurring right now so.

Ben: Our business momentum do not have sufficient size to offset those losses, but.

Ben: What we're focused on is expanding our value segment offerings.

Mark Bendix: We've just introduced in April Sara Lee Half Loaves. We've also introduced bimbo bread as a value component in this category as well, and it's doing exceptionally well. Alternatively, in the premium side of the business, we've expanded the distribution of Rustique and introduced a number of protein-focused products along with Artesano Hawaiian to get that premium product. So we're trying to play the high and the low, and then through RGM, we are doing selective promotions because things are a lot different now in terms of promotional response from consumers in the U.S. after the pandemic. So hopefully that helps out a little bit then.

Ben: We've just introduced in April a thoroughly half flows.

Ben: <unk> also introduced bimbo bread as a value component in this category as well and it's doing exceptionally well.

Ben: Alternatively on the premium side of the business, we've expanded the distribution of rustic and introduced a number of protein focused products, along with Artesano Hawaiian to get that premium product. So we're trying to play the high and the low end then.

Ben: Through our G. M. We are doing selective promotions because things are a lot different now in terms of promotional response from consumers in the U S. After the after the pandemic, so hopefully that helps out a little bit better.

Ben Tara: Yes, it does.

Speaker Change: Yes. It does and then a quick follow up for for Diego I'm, just thanks for the clarity on the guidance and the explanation behind that as we as we look into it.

Diego Vajiola: And then a quick follow-up for Diego, just thanks for the clarity and the guidance and the explanation behind that. As we look into it for certain other items, how should we think about CapEx for the year as we progress throughout the coming quarters? Are you looking into reducing some of the CapEx, just given that there might not be the need for it? So just how to think about CapEx, but also needs for working capital. Any update that you can give us on cash flow items, that would be great. Thank you.

Speaker Change: For certain other items, how should we think about capex for the year as we progress throughout the coming quarters are you are you looking into reducing some of the capex just given that there might not be the need for it. So just how should how do you think about capex, but also a need for working capital and the update that you can give us.

Speaker Change: On cash flow items that would be great.

Speaker Change: Great. Thank you.

Diego Vajiola: Sure, Ben. You probably know this, and everybody knows this, and I would probably highlight with this question that It was a quarter in which we were able to generate positive free cash flow, $18 million. And this is because even though having a lower, I mean... We are in the process of improving the EFX effect and the challenges that we have already discussed during the call. We are doing, I would say, cautions. and looking for efficiencies on the way that we execute our CAPEX program. And that led us to a total investment program in the first quarter of $260 million.

Speaker Change: Charlotte.

Speaker Change: You, probably notice and let everybody know this and I would probably highlight with these questions.

Speaker Change: It was a quarter in which we were able to generate positive free cash flow $80 million.

Speaker Change: And this is because even though having a lower oh I mean.

Speaker Change: E V life during the FX effect.

Speaker Change: The challenges that we have already these calls.

Speaker Change: On the call.

Speaker Change: We are being I would say gauchos.

Speaker Change: I'm looking for efficiencies and the way that we execute our Capex program.

That led us to a total investment program in the first quarter of two come to around $60 million.

Diego Vajiola: I would say we are still not adjusting the forecast. If you remember, we said around $1.4 billion, $1.4 to $1.5 billion. Today, I would probably feel more in the low end of the range. We're still analyzing several projects, so that's why we still didn't want to adjust the guidance. I wouldn't be surprised if in the next quarter we move the number slightly below the initial guidance. For the capital, for the working capital as you saw, we generated close to a billion types $40-something million of positive working capital during the first quarter. We have been working very intensively internally to improve our working capital position.

I would say we are still not adjusting.

Speaker Change: The forecast, you'll remember we said around one four.

Speaker Change: One four to one $5 billion a door.

Speaker Change: We'd probably feel more are in the low end of the range.

Speaker Change: We're seeing on the licensing several projects. So that's why we just didn't get it wanted to adjusting items, but I wouldn't be surprised if in the next quarter, we moved a number slightly below with Michelle.

Speaker Change: That's sort of a cap rate or the working capital as you saw we generated close to a billion pesos.

Speaker Change: 40, something million dollars of positive working capital.

Speaker Change: During the first quarter we.

Speaker Change: We have been working very intensively and thirdly to improve our working capital position, we just didn't see a lot of opportunities.

Diego Vajiola: We still see a lot of opportunities in many different lines and many different geographic So I would say that I feel confident that we will also generate. from our working capital as opposed to last year. Okay, so we have an easy point of departure without taking any merit from the whole program that we have been executing. So I think it's, on that regard, it's gonna be a positive year, and of course, will help us to improve our financial condition.

Speaker Change: In many different lines of movies.

Speaker Change: Geographies.

Speaker Change: I would say that I feel confident that we will also generate.

Speaker Change: Our cash from our working capital as opposed to last year.

Speaker Change: We have a.

Speaker Change: Music point of departure without taking any merit from the whole program, but we have been executing.

So I think it's on that regard.

Speaker Change: It'll be a positive year and of course will help us.

Speaker Change: We improved our financial position.

Diego Vajiola: Okay, perfect. Thank you very much for that caller, Diego. Thank you.

Speaker Change: Okay perfect. Thank you very much for that color Jacob.

Jacob: You're welcome.

Alvaro Garcia: Your next question comes from Alvaro Garcia from Baytage-A. Please go ahead. Hi, I'm Biel, Rafa, Mark, hope you're doing well. My first question is on innovation, I guess, maybe for Rafa or Mark, about how you think about innovation in this environment. Obviously, a lot of shifting consumer habits. People trying new ingredients, but at the same time, probably a tougher environment to sort of lean into innovation. So, any thoughts with regards to innovation, specifically in the U.S., would be helpful. And my second question is on private label in Mexico, something we've discussed on this call quite a bit.

Speaker Change: Thank you. Your next question comes from Alberto Garcia from Big P. J.

Speaker Change: Please go ahead.

Speaker Change: Okay.

Speaker Change: Hi, Bill.

Speaker Change: Mark Hope you're doing well.

Speaker Change: My first question is on innovation.

Speaker Change: Maybe first off our remark about.

Speaker Change: About how you think about innovation in this environment, obviously, a lot of shifting consumer habits.

Speaker Change: People are trying new ingredients, but at the same time, probably a tougher environment to sort of lean into innovation. So any thoughts with regards to innovation specifically in the U S would be would be helpful. And my second question is on a private label in Mexico.

Speaker Change: As we've discussed on this call quite a bit and I was just wondering if you could comment on the degree of change or the degree of.

Rafael Pamias: I was just wondering, Rafa, if you could comment on the degree of change or the degree of... to how the consumer is taking on private label bread in Mexico. It's a new sort of phenomenon. I know you're present in the space, but any sort of comments with regards to that would be very helpful.

Speaker Change: Let's see how the consumers taking on a private label bread in Mexico with the new sort of sort of phenomenon I know your credit in the space, but any sort of comments with regards to that would be very helpful. Thank you.

Mark Bendix: I'll start out on I'll start out on innovation and you can augment as necessary. Our strategic focus on innovation is multi-brand, channel and format strategy to capture younger and new consumers. Refreshing our portfolio with new flavors, products, price pack architecture, example include Butter Buns from Bimbo, Thomas Protein Bagels, the expansion of Muffin Tops, Thomas' Croissant Bread, Sara Lee Half Loaves, all of those things addressing underpenetrated consumers, including value-oriented consumers and products to meet the evolving consumer needs. We have execution precision, improving in-store availability and going after the healthy space with the advent of GLP-1 drugs.

Speaker Change: I'll start out on I'll start out and innovation and you can augment as is necessary.

Speaker Change: Oh no.

Speaker Change: Our strategic focus on innovation is multi brand channel 10 format strategy to capture younger and new consumers.

Speaker Change: Refreshing our portfolio with new flavors products price pack architecture example include butter bonds.

Speaker Change: Hum.

Speaker Change: Bimbo Thomas protein bagel expansion of Muffin tops Thomas's croissant bread.

Speaker Change: Italy have loves all of those things addressing underpenetrated consumers, including value oriented consumers and products to meet evolving consumer needs.

Speaker Change: We have.

Speaker Change: Execution precision improving in store availability.

Speaker Change: And going after the healthy space.

Speaker Change: With the advent of G. L P. One drugs.

Rafael Pamias: We need to have products that meet that consumer and high-protein is a way to get there, including plant-based and high-protein breads and snacks. Rafa, if there's something else you want to add? close to those demographics that are having some more trouble. to reach month end but also we have developed worldwide the premium segment portfolio which is growing in many geographies double-digit so there is a space for price pack architecture for value offerings but also there's a lot of appetite for the premium sector. And last but not least, I mean, we are still having the opportunity to cover better key occasions and growing needs, notably in the health and wellness, but also pushing the transition from artisan, artisanal bread and sweet baked goods into the package category.

Speaker Change: We need to have products that meet that consumer and high protein as a way to get there including <unk>.

Speaker Change: They are based and our high protein breads and snacks.

Speaker Change: Right.

Alex: Alex do you want to add.

Speaker Change: Yeah.

Speaker Change: If you think about what what would complete it is alberto by saying that we have a.

Speaker Change: And extended meaning for innovation. So we go from very actively pursue price pack architecture to be close to those demographics that are.

Speaker Change: Having some more trouble to do to reach our month end, but also we have developed worldwide. The premium segment portfolio, which is growing in many geographies double digit. So there is a space for livestock architecture for value offerings, but also there's a lot.

Speaker Change: Appetite for the premium segment.

Speaker Change: And last but not least I mean, we are just still having the opportunity to cover better P locations and growing needs, notably into health and wellness, but also pushing the transition from artisan additional.

Speaker Change: And sweet baked goods into the package category. So so we see.

Rafael Pamias: So we see plenty of opportunities if we do them right.

Plenty of opportunity, if we do them right.

Rafael Pamias: And I would move to private label in Mexico, and what I would say is that in Mexico, where definitely our mission is to follow the shopper wherever they go. So in this sense, we are ready to commit. to those who push private label, notably modern trade and hard discounters, into a complete offering that will have branded and unbranded representation. And so far, we are quite active on the bread category. important customers and we plan to grow more to make sure that we go where our shopper is going to feel more comfortable with completing their shopping.

Speaker Change: And I would move to a private labeling in Mexico, and and what I would say is that.

Speaker Change: Private label.

Speaker Change: <unk> in Mexico, we are definitely our mission is to follow the shopper wherever they go so in this sense, we are ready to commit.

Speaker Change: To those who bush private label, notably modern trade in hard discounters into a complete offering that we'll have branded and unbranded propositions and so far we are quite active on the bread category.

Speaker Change: In.

Speaker Change: Important customers and we plan to grow more to make sure that we go where our shopper is going to to feel more.

Speaker Change: More comfortable with completing their shopping missions. So you will see more of us.

Operator: so you will see more of us. That's clear. Thank you very much. Thank you. Once again, if you would like to ask a question, please press star, then one.

Speaker Change: In such an arena.

Speaker Change: Yeah.

Speaker Change: That's clear thank you very much.

Speaker Change: Absolutely.

Speaker Change: Thank you once again, if you would like to ask a question. Please press Star then one.

Julio Cesar Martinez: Your next question comes from Julio Cesar Martinez from Sura Investments. please go ahead.

Operator: Next question comes from Julio Cesar Martinez from solar investments.

Julio Cesar Martinez: My question has been answered. Thanks.

Speaker Change: Please go ahead my question has been answered.

Speaker Change: Thanks.

Ferdinando Galesi: Your next question will then come from Ferdinando Galesi from Rovatown Group. Hi Rafa, Diego and Tim. One question related to the cash position. You almost doubled the cash position almost 900 million dollars and you have a maturity in 2026. This increase in cash is in Eastern Europe. Did you pay or you have? Again, just thinking in the guest position.

Speaker Change: Your next question will then come from particularly our Galaxy from Rubottom group.

Ralph: Hi, Ralph.

Ralph: One question related to the cash proceeds from the.

Speaker Change: I must cover the cost position and I'm not known kind of million dollar on your call. The maturity in 2020 seats gruesome recent gas east.

Ralph: For this maturity or.

Speaker Change: The other acquisition that Judy and Bob are you planning to do then I mean, the competition and the last question is the new up when she shining.

Speaker Change: In Eastern Europe did you pay or you'll have to pay so again sort of thinking there.

Speaker Change: Position.

Diego Vajiola: Hi Federico. Yeah, let me start by the second one. We already paid for this acquisition. It's a small but relevant for Romania strategic acquisition. We already paid for it literally today in the morning Europe time. So that's why Rafa during the call announced this and it's also in the pre-release of a recent. at the beginning of the year, the 15 billion pesos. We anticipated the needs that we have, I would say, with a combination, of course, of the two M&A projects. that were announced last year, Dondon in Europe and Wikibon in Brazil. So we thought it was a good moment to go to the market.

Speaker Change: Alright, that's very cool.

Speaker Change: Let me start by the second one we already paid for this acquisition.

Speaker Change: It's a small but relevant for Romania.

Speaker Change: The <unk> acquisition we.

Speaker Change: We already paid for literally two eight in the morning Europe right.

Speaker Change: So that's why I really.

Speaker Change: No.

Speaker Change: These tend to be the bread relief as I've recently.

Speaker Change: Regarding the cash position you're right.

Speaker Change: We ended the quarter with our already strong cash position that has to do with the issuance of the total was up and that will be.

Speaker Change: The end of the year with 15 billion faithful.

Speaker Change: Each one.

Speaker Change: <unk>.

Speaker Change: We anticipate their.

Speaker Change: The needs that we have I would say with a combination of them of course, we do.

Speaker Change: And in April.

Speaker Change: But we're on our own slot here don't born in Europe.

Speaker Change: You won't be in Brazil.

Speaker Change: So we thought it was a good moment to go to the market.

Diego Vajiola: issue the debt, and make sure that we have the money, not only for the acquisitions. Also, remember that we... Although we're lowering the Capex as compared to last year and a important reduction as compared to two years ago, it is still, I'd say, a very active investment program that we have. so I wouldn't link these issuance to the maturity that we have in 2026, 10 billion pesos of a Certificado Borsátil as well, which is more towards the end of 2026. October of 2026, so for that liability management, we still have a lot of time. OK.

Speaker Change: You should go there and make sure that we have the money not only for the acquisitions also remember that we although we're lowering the capex as compared to last year.

Speaker Change: Portola revokes from as compared to two years ago.

Speaker Change: It's been I'd say very active investment program that we have.

Speaker Change: So I wouldn't link these each ones.

Speaker Change: Two the maturity that we have been pretty clean sheets, 10 billion pesos or faster than Chicago was up til as well, which is more towards the end of 'twenty six.

Speaker Change: Turning sexual for that liability management, we still have a little spike.

Diego Vajiola: Perfect.

Speaker Change: Okay perfect. Thank you so much.

Fernando Alvera: Thank you so much. Thank you.

Fernando Alvera: Your next question comes from Fernando Alvera from Bank of America. Please go ahead. Hi, good afternoon. Thanks for taking my question. Diego, sorry if I missed the answer.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Fernando Olvera from Bank of America. Please.

Speaker Change: Please go ahead.

Fernando Olvera: Hi, good afternoon, Thanks for taking my question.

Speaker Change: Google has been totally fine.

Speaker Change: Yeah.

Diego Vajiola: I just wanted to check, regarding the new guidance for the year of EBITDA growth in each single digit, I mean, is lower growth mainly explained by North America or is there something else? Yes, Fernando, let me try to write you with a little bit. VTIC first. What we are assuming and the most relevant component on the adjustment for the guidance for the year has to do with the change that we're doing on the assumption of the exchange rate for 2025. As you know, it has been very volatile. A few weeks ago, we were above 21 pesos.

Speaker Change: And what we've already done the math.

Speaker Change: The new guidance for the year.

Speaker Change: And as that grows mid single digits.

Speaker Change: Lower growth.

Speaker Change: Lane by North America or.

Speaker Change: Something else.

Speaker Change: Yes.

Speaker Change:

Speaker Change: Let me.

Speaker Change: Tried to provide you with a little bit.

Speaker Change: Victor.

Speaker Change: First what.

Speaker Change: What we're assuming is the most relevant component of the adjustment for the guidance for the year for us to do.

Speaker Change: With the change that we're doing on the assumption of the exchange rate for the 2025 as you'll know it because we very volatile.

Speaker Change: A few weeks ago, we were above 21 pesos now we're seeing the peso 1950.

Diego Vajiola: Now, we're seeing the peso of 1950. So I would still feel confident on the assumption, but we believe that it was probably a little bit off the range to continue to assume 21 pesos for the average of the year. In the first quarter, the average was 20 pesos and 40 something. Of course, we do not think that it's going to remain 1950, but doing our calculations and the best effort that we can do, and again, not assuring any that we're going to be accurate, we think it was responsible to lower this number. By lowering the exchange rate with the diversification that we have in Grupo Bimbo, having almost two-thirds of our revenues outside of Mexico.

Speaker Change: So I would still feel confident on the assumption.

Speaker Change: We believe that it was probably a little bit of the range to continue to assume 21 pesos for the average of the year in.

Speaker Change: In the first quarter. The average was 20 patients from 40 something soon.

Speaker Change: Of course, we do not think that it's going to remain at 1950.

Speaker Change: Doing our calculations on day rates, therefore that we can do and again not for sure you can hear me.

Speaker Change: But we're gonna react great.

Speaker Change: We think it was responsible to lower be flown by lowering the exchange rate, we did diversification, but we're having a little profitable having almost two thirds of our revenues outside of Mexico.

Diego Vajiola: We're having a decrease in our top line growth of approximately 2%. So if you think that we provided a couple of months ago. and expectation of low double digit, considering these two percentage points, you basically go down to a high single digit. It's clear that we're seeing a more challenging environment in the So we did adjust our expectation for the operations in North America, mainly because of the US. So this, again, is not as big as the adjustments on the exchange rate. remains on the expectation of a high single digit. That's for the top line.

Speaker Change: Were having a decrease in our topline growth of approximately two percentage points.

Speaker Change: Well, if you think that we provided a couple of months ago.

Speaker Change: And the expectation of low double digit.

Speaker Change: Considering these two percentage points youre basically rolled out to a high single digit.

Speaker Change: That's for the top line on top of the exchange rate.

Speaker Change: It's clear that we're seeing a more challenging environment in the U S.

Speaker Change: So we adjusted our expectation for the operations in North America, mainly because of the U S not in Canada.

Speaker Change: So at least I mean.

Speaker Change: He's brought a b at the of the adjustments on the exchange rate.

Speaker Change: Remain.

Speaker Change: The expectation of a high single digit.

Diego Vajiola: Now. If we go to the EBITDA line, we also have a very important component, approximately 50% of our EBITDA outside of Mexico. Lowering the exchange rate means a lower growth, but here a little bit more impactful than the exchange rate. It's lowering our top line expectation in the U.S. with the flow through on the profits of the company. So because of this, we are moving our expectation on margins from a slight margin increase to a slight margin decrease. So just wanted to be clear that it is very relevant adjustment that we're doing on the exchange rate.

Speaker Change: That's sort of a popular now.

Speaker Change: If we go through the year with a line. We also have a very important component approx, 50% of our EV that outside of Mexico.

Speaker Change: Lower interchange rate means a lower growth bought here a little bit more but they can be exchange rate.

Speaker Change: It's lowering our top line expectations in the U S.

Speaker Change: With the flow through.

Speaker Change: On the profits of the company.

Speaker Change: Because of these we are moving our expectation the margins from a slight margin increase to a slight margin decline. So just wanted to wish to mirror that.

Speaker Change: It is very relevant that just moved up where to go in on the exchange rate. It is.

Diego Vajiola: It is not the only one. We are also adjusting our expectations for North America with a lower impact than the exchange rate.

Speaker Change: Not the only one we are also adjusting our expectations for North America with a lower impact.

Speaker Change: Exchange rate.

Diego Vajiola: Got it, got it, and my second question also related to North America, you mentioned that you saw some pressure from labor costs, can you give us more color on that, what is the reason behind that and what should we expect going forward? Well, yeah, if I got your question correctly, I'm sorry, Fernando. is for specifically in EAA and if we go more granular in Romania, we had an important increase in the cost of labor. Now in some other regions, we're still seeing some pressure, in one hand because of inflation. In other operations, like in the US, because of having lower volumes.

Speaker Change: Got it got it.

Speaker Change: Hi, My question also.

Speaker Change: Related to North America, you mentioned that.

Speaker Change: But if so.

Speaker Change: Breaking from labor cost.

Speaker Change: Okay.

Speaker Change: Even more color on that.

Speaker Change: And the reason behind that and what's your view going forward.

Speaker Change: Well yeah.

Speaker Change: If I got your question correctly, it's probably for Linda.

Speaker Change: Yeah.

Speaker Change: Very very clear on the communication.

Speaker Change: What we measure where labor cost is more or.

Speaker Change: Local point of view not flu certainly for North America.

Speaker Change: G E M E. I mean, we go more granular in Romania, we had an important increase in the cost of labor.

Speaker Change: Now in some other regions, we're still seeing some pressure in one hand because of inflation in rather.

Speaker Change: Operations like in the U S because of having lower volumes and the operating leverage that we have in the company of course, we're losing part of the margin.

Diego Vajiola: And with the operating leverage that we have in the company, of course, we're losing part of the margin. is the are made to put the comment more than North America. Ah, okay, okay. Got it. Perfect. Thank you, Diego. Thank you.

Speaker Change: Because of the cost of labor.

Speaker Change: In some other markets because salaries are growing well continue to roll off the coast of Mexico.

Speaker Change: So I would tell you that Oh world, we're seeing some inflation in labor, particularly the effect that I imagine in Romania, the ones that are made.

Speaker Change: To put the comment motivating North America.

Speaker Change: Okay, Okay got it right.

Speaker Change: Thank you.

Operator: Again, if you have a question, please press star then 1.

Speaker Change: Thank you again, if you have a question. Please press Star then one.

Nicole Helm: Your next question comes from Nicole Helm from MetLife. Please go ahead. Nicole, your line is currently live. Please go ahead.

Nicole helm: Your next question comes from Nicole helm from Metlife.

Speaker Change: Go ahead.

Speaker Change: Nicole Your line is currently Laura Please go ahead.

Operator: As there are no further questions then, this does conclude our question and answer session.

Speaker Change: As there are no further questions and this does conclude our question and I have professional.

Rafael Pamias: I would now like to turn the conference back to Mr. P. Armist for any closing remarks. Thank you all for your time today, please do not hesitate to contact us with any further comments or questions you might have.

Mr. Piano: Like to turn the conference back to Mr piano for any closing remarks.

Mr. Piano: Yes. Thank you all for your time today, please do not hesitate to contact fast with any further comments or questions. You might have thank you very much for joining and have a great day.

Rafael Pamias: Thank you very much for joining and have a great day.

Mr. Piano: Yeah.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Mr. Piano: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now disconnect. A. B. C. A. B. C. A.

Mr. Piano: Okay.

Mr. Piano: [music].

Mr. Piano: Hmm.

Mr. Piano: [music].

Mr. Piano: Yeah.

Mr. Piano: Okay.

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Mr. Piano: Yeah.

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Yeah.

Mr. Piano: Uh huh.

Mr. Piano: [music].

Mr. Piano:

Mr. Piano: Uh huh.

Mr. Piano: Okay.

Mr. Piano: Uh huh.

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Mr. Piano: Yeah.

Mr. Piano:

Mr. Piano: Uh huh.

Mr. Piano: Okay.

Mr. Piano: Yeah.

Mr. Piano:

Mr. Piano: Yeah.

Mr. Piano: Yeah.

Mr. Piano: Hum.

Mr. Piano: Hum.

Mr. Piano: Yeah.

Mr. Piano: Okay.

Mr. Piano: Okay.

Mr. Piano: [music].

Mr. Piano: Hum.

[music].

Mr. Piano: Yeah.

Yes.

Mr. Piano: Yeah.

Mr. Piano: Yeah.

Mr. Piano: Uh huh.

Mr. Piano: Yes.

Mr. Piano: Okay.

Mr. Piano: Yeah.

Mr. Piano: [music].

Mr. Piano: Uh huh.

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Mr. Piano: Yeah.

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Mr. Piano: Uh huh.

Mr. Piano: [music].

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Mr. Piano: Okay.

Mr. Piano: Yes.

Mr. Piano: [music].

Mr. Piano: Okay.

Mr. Piano: [music].