Q1 2026 Genomma Lab Internacional SAB de CV Earnings Call

April 23, 2026

Speaker #2: Good day, ladies and gentlemen. Thank you for joining Genomma Lab's first quarter 2026 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions.

Operator: Good day, ladies and gentlemen. Thank you for joining Genomma Lab's Q1 2026 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. As a reminder, this meeting is being recorded and will be available for replay from the investor relations section of Genomma's website following the call. I'll now turn the call over to Christianne Ibañez, Genomma's head of investor relations. Please go ahead.

Speaker #2: As a reminder, this meeting is being recorded and will be available for replay from the Investor Relations section of Genomma's website following the call.

Speaker #2: I'll now turn the call over to Christian Ebañez, Genomma's Head of Investor Relations. Please go ahead.

Speaker #3: Thank you. And welcome, everyone. On today's call, I am Marcos Barbieri, chief executive officer, and Antonio Zamora, chief financial officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements such as the company's financial guidance and expectations, including long-term objectives and forecasts, as well as expectations regarding Genoma's business, products, strategies, demand, and markets.

Christianne Ibañez: Thank you, and welcome, everyone. On today's call, I have Marco Sparvieri, Chief Executive Officer, and Antonio Zamora Galland, Chief Financial Officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements such as the company's financial guidance and expectations, including long-term objectives and forecasts, as well as expectations regarding Genomma's business, products, strategies, demands, and markets. These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today, and the company undertakes no obligation to update them as a result of new information or future events. Let me now turn the call over to Mr. Marco Sparvieri.

Christianne Ibáñez: Thank you, and welcome, everyone. On today's call, I have Marco Sparvieri, Chief Executive Officer, and Antonio Zamora Galland, Chief Financial Officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements such as the company's financial guidance and expectations, including long-term objectives and forecasts, as well as expectations regarding Genomma's business, products, strategies, demands, and markets. These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today, and the company undertakes no obligation to update them as a result of new information or future events. Let me now turn the call over to Mr. Marco Sparvieri.

Speaker #3: These statements are subject to risks and uncertainties that could cause actual results to differ materially. There are also based on assumptions as of today and the company undertakes no obligation to update them as a result of new information or future events.

Speaker #3: Let me now turn the call over to Mr. Marcos Barbieri.

Speaker #2: Thank you, Chris. And thank you, everyone, for joining our first quarter 2026 earnings call. Let me open with where we stand. We are executing on our growth initiatives, expanding distribution, opening up new routes, in the traditional channel, stepping up Easter execution, and increasing media investment.

Marco Sparvieri: Thank you, Chris. Thank you everyone for joining our Q1 2026 Earnings Call. Let me open with where we stand. We are executing on our growth initiatives, expanding distribution, opening up new routes in the traditional channel, setting up in-store execution, and increasing media investments. This execution is delivering early signs of market share recovery in Mexico, which is encouraging. At the same time, sell-out is growing slower than we expected, driven by further food market category contraction in Mexico, most notably in OTC. The main performance issues are concentrated in three areas: beverage in Mexico, gastro in Mexico, and to-go in the United States. We are adapting our plans with targeted interventions on these issues, and we expect recovery between Q2 and Q3 2026. We remain confident in our growth initiatives as we navigate a tough consumption environment in Mexico.

Speaker #2: This execution is delivering early signs of market share recovery in Mexico, which is encouraging. At the same time, sell-out is growing slower than we expected.

Speaker #2: Driven by further full market category contraction in Mexico, most notably in OTC. The main performance issues are concentrated in three areas: beverages in Mexico, gastro in Mexico, and To Cold in the United States.

Speaker #2: We are adapting our plans with targeted interventions on these issues, and we expect recovery between Q2 and Q3 2026. We remain confident in our growth initiatives as we navigate a tough consumption environment in Mexico.

Speaker #2: I would also like to thank our investment community for your continued trust. We will continue to operate with the highest level of transparency, and please do not hesitate to reach out with any questions beyond this call.

Marco Sparvieri: I would also like to thank our investment community for your continued trust. We will continue to operate with the highest level of transparency, and please do not hesitate to reach out with any questions beyond this call. Now, let me address five key highlights of the quarter. Number one, LATAM continues to deliver solid results while net sales remain under pressure from a weak consumption environment in Mexico, and Hispanic market disruptions in the United States. Two, we are facing the toughest comparative base of the year, with significant FX headwinds offsetting LATAM's strong like-for-like performance. Three, in Mexico specifically, food market category contractions are weighing on sell-out, and we are adjusting our plans to offset targeted weakness. Number four, our disciplined OpEx behind growth initiatives kept margins stable despite operating deleverage.

Speaker #2: Now, let me address five key highlights of the quarter. Number one, LATAM continues to deliver solid results while net sales remain under pressure from a weak consumption environment in Mexico.

Speaker #2: And Hispanic market disruptions in the United States. Two, we are facing the toughest comparative days of the year, with significant FX headwinds offsetting LATAM's strong like-for-like performance.

Speaker #2: Three, in Mexico specifically, full market category contractions are waiting on sell-out, and we are adjusting our plans to offset targeted weakness. Number four, our disciplined OPEX behind growth initiatives kept margins stable despite operating deleverage.

Speaker #2: Number five, increased investment is required to support sell-out and defend market share aimed at increased competition, while Mexican consumption remains soft. Turning to our consolidated results, like-for-like sales declined 3.9%, and net sales declined 4.9%, impacted by a 13.9% appreciation of the Mexican peso. The top line reflects a soft Mexican consumption environment, partially offset by 5.3% like-for-like growth in LATAM.

Marco Sparvieri: Number five. Increased investment is required to support sell-out and defend market share amid increased competition, while Mexican consumption remains soft. Turning to our consolidated results, like-for-like sales declined -3.9%, and net sales -4.9%, impacted by a 13.9% appreciation of the Mexican peso. The top line reflects a soft Mexican consumption environment, partially offset by +5.3% like-for-like growth in LATAM. Gross margin expanded +61 basis points to 63.4%, reflecting the productivity gains we have been building. EBITDA margin declined -96 basis points to 22.8%, as we invested behind our growth initiatives into a weaker than expected demand environment. Net margin expanded +49 basis points to 11.8% on lower taxes and financial expenses. This view shows where the pressure is coming from. Two geographies are driving the consolidated gap. Mexico, representing 45% of our business, contracted -5.8% in sell-out, and the USA, at 8% of the mix, declined -10.3%.

Speaker #2: Gross margin expanded 61 basis points to 63.4%, reflecting the profitability gains we have been building. EBITDA margin declined 96 basis points to 22.8%. As we invested behind our growth initiatives into a weaker-than-expected demand environment, net margin expanded 49 basis points to 11.8% on lower taxes and financial expenses.

Speaker #2: This view shows where the pressure is coming from. Two geographies are driving the consolidated gap. Mexico is pressing 45% of our business—sorry, Mexico representing 45% of our business—contracted -5.8%.

Speaker #2: In sell-out, the USA had 8% of the mix and declined by -10.3%. On the other side, LATAM makes Argentina grow +45%, 4.5%, and Argentina grew +96.6% in local currency.

Marco Sparvieri: On the other side, LATAM ex Argentina grew +4.5%, and Argentina grew +96.6% in local currency. LATAM is compensating, but the recovery work is squarely on Mexico and the United States. One of the macro headwinds we are navigating is remittances, which directly affect Mexican consumer purchasing power. After declining 5% in dollar terms in 2025, the peso value of remittances deteriorated sharply in early 2026, down -16.9% in January and -15.6% in February. This is the combined effect of lower dollar inflow and a stronger Mexican peso. It is a real drag on the consumer we serve. At the full market level, the categories where we compete are contracting. After a weak 2025, OTC is now down -6.3% year to date through March, reflecting a softer consumer. Beverages, personal care, and infant nutrition are all slightly negative as well.

Speaker #2: LATAM is compensating that the recovery works, fits squirrel on Mexico and the United States. One of the macro headwinds we are navigating is remittances.

Speaker #2: Which directly affect Mexican consumer purchasing power. After declining 5% in dollar cents in 2025, the peso value of remittances deteriorated sharply in early 2026, down 16.9% in January and 15.6% in February.

Speaker #2: This is the combined effect of lower dollars inflow and a stronger Mexican peso. It is a real drag on the consumer reserve. At the full market level, the categories where we compete are contracting.

Speaker #2: After a weak 2025, OTC is now down 6.3% year to date, through March, reflecting a softer consumer. Beverages, personal care, and infant nutrition are all slightly negative as well.

Speaker #2: This is a full market headwind, not a genoma-specific one, but it continues to weigh directly on our sell-out. Again, that contracting market backdrop, this is one of the most encouraging signals of the quarter.

Marco Sparvieri: This is a full market headwind, not a Genomma-specific one, but it continues to weigh directly on our sell-out. Again, that constricting market backdrop. This is one of the most encouraging aspects of the quarter. Genomma Lab Mexico is improving market share sequentially across every key category. In full year 2025, market share remained largely stable across categories, with the exception of oral care, which declined 1.8 percentage points due to pricing pressure late in the year. With the available DIOT data for 2026, we can see sequential improvements versus the full year 2025 across categories. Our categories are gradually recovering terrain. These moves are modest, but they indicate that our growth initiatives are beginning to gain traction despite a challenging environment. Let me walk you through the three priority issues we are actively addressing.

Speaker #2: Genomma Lab Mexico is improving market share sequentially across every key category. In full year 2025, market share remained largely stable across categories, with the exception of oral serums, which declined 1.8 percentage points due to pricing pressure late in the year.

Speaker #2: With the available data for 2026, we can see sequential improvement versus the full year 2025 across categories. Our categories are gradually recovering terrain. These moves are modest, but they indicate that our growth initiatives are beginning to gain traction despite a challenging environment.

Speaker #2: Let me walk you through the three priority issues we are actively addressing. These are the concentrated performance issues, and we want to be very specific about the challenges and the action plans behind each.

Marco Sparvieri: These are the concentrated performance issues, and we want to be very specific about the challenges and the action plans behind each. First, Suerox in Mexico, pressured by a contracting category and increased competition. We're launching Suerox Gas exclusively in Walmart, OXXO, and the traditional channels, targeting 250,000 points of sale within three months. Second, Gastro in Mexico, under pressure from a contracting category and generics gaining traction. We're bringing Genoprazol to price parity with generics and investing in incremental media behind QG5 and Nikzon. Third, Tukol in the United States, where the brand is pressured and the B2B Hispanic channel is contracting following the big US Hispanic market disruptions. We're scaling perfect store execution and e-commerce. We're protecting cash. Recovery on the three priorities is expected between Q2 and Q3 2026. Let me go deeper on Suerox because it is the largest single priority.

Speaker #2: First, Xerox in Mexico is pressured by a contracting category and increased competition. We're launching Xerox Gas, exclusive in Walmart, OXXO, and the traditional channels. We're targeting 250,000 points of sale within three months.

Speaker #2: Second, gastro in Mexico. Under pressure from a contracting category and generics gaining terrain. We're bringing Enoprazole to price parity with generics, and investing in incremental media behind QG5 and Nixon.

Speaker #2: And third, to coin in the United States, where the brand is pressured and the B2B Hispanic channel is contracting. Following the deep US Hispanic marketing disruption and market disruptions, we're scaling Perfect Store execution and e-commerce while protecting cash recovery. On these three priorities, expected recovery is anticipated between Q2 and Q3 2026.

Speaker #2: Let me go deeper on Xerox because it is the largest single priority. We launched a bolder new brand image in March—a cleaner label, stronger shelf impact, and a unified look across the portfolio.

Marco Sparvieri: We launched a bolder new brand image in March, cleaner label, stronger shelf impact, and a unified look across the portfolio. We are adding 60,000 new stores in the traditional channels and deploying 27,000 branded coolers at the point of sale. We are also launching Suerox Mineo, a zero-sugar carbonated isotonic beverage that extends the brand beyond traditional hydration into functional carbonated refreshment. Same brand equity, genuinely new consumer experience. The launch is backed by cooler replacement at 25,000 outlets and all Walmart stores supported by AI-powered digital ads. We are timing the Mexican launch for summer 2026, the peak category season. This is the category bet with the biggest near-term upside on volume and share. We're also evolving how we communicate with our consumers. We're shifting incremental media investment toward digital-first mix, TikTok, Instagram Reels, and YouTube Shorts.

Speaker #2: We are adding 60,000 new stores in the traditional channel and deploying 27,000 branded coolers at the point of sale. We are also launching Xerox Mineral.

Speaker #2: A zero-sugar carbonated isotonic beverage that extends the brand beyond traditional hydration into functional carbonated refreshment. Same brand equity, generally new consumer experience. The launch is backed by cooler replacement at 25,000 OXXOs and all Walmart stores, supported by AI-powered digital apps.

Speaker #2: We are timing the Mexican launch for summer 2026, the peak category season. This is the category bet with the biggest near-term upside on volume and share.

Speaker #2: We're also evolving how we communicate with our consumers. We're shifting incremental media investment toward a digital-first mix—TikTok, Instagram, Reels, and YouTube Shorts. At the same time, AI-powered creative production is lowering our cost per asset.

Marco Sparvieri: At the same time, AI-powered creative production is lowering our cost per asset, accelerating time to market, and letting us test far more variables. Critically, this communication engine is directly aligned to our Mexico priorities. Mixol, reactivating the gastro category, and Suerox support the QG5 launch. Let me be direct about the margin implications. Over the next three to six months, we expect EBITDA margin pressure as we prioritize market share to increase discounts, higher A&Ps, increased digital communication, and stronger in-store and distribution spend. Beyond that window, we expect growth initiatives to ramp up and operational leverage to improve. The choice to invest now is deliberate. Defending market share today is what protects the company's value tomorrow. Our productivity engine is what is letting us self-fund this investment. What started as a modest program in 2023 has compounded into accumulated savings of MXN 1.8 billion through 2025.

Speaker #2: Accelerating time to market and letting us test far more variables. Critically, this communication agent is directly aligned to our Mexico priorities. Nixon reactivating the gastro category and Xerox support the gas launch.

Speaker #2: Let me redirect about the margin implications. Over the next three to six months, we expect EUDA margin pressure as we prioritize market share. To increase discounts, higher gaps, and digital communication increases.

Speaker #2: And stronger in-store and distribution spend. Beyond that window, we expect growth initiatives to ramp up and operational leverage to improve. The choice to invest now is deliberate, extending market share today is what protects the company's value tomorrow.

Speaker #2: Our productivity limiting is what is letting us self-fund this investment. What started as a modest program in 2023 has compounded into accumulated savings of $1.8 billion pesos through 2025.

Speaker #2: We have secured an additional 1.1 billion pesos in savings by 2026, bringing the accumulated total close to Mexican 3 billion. These resources are secured and are fueling every growth initiative in our 2026 recovery plan.

Marco Sparvieri: We have secured an additional MXN 1.1 billion in savings by 2026, bringing the accumulated total close to MXN 3 billion. These resources are secured and are fueling every growth initiative in our 2026 recovery plan. However, further resources are needed to defend market share in a weak consumption environment. Let me give you a couple of examples of our growth initiatives. The traditional channel expansion is a key growth engine, and it is already executing. In 2026, we're opening 430 new routes and adding 138,000 new points of sale across Mexico and Latin America. We are also deploying in-store media in 314,000 points of sale. We are not just expanding coverage, we are activating it. In-store execution is the single largest contributor to our growth plan.

Speaker #2: However, further resources are needed to defend market share in a weak consumption environment. Let me give you a couple of examples of our growth initiatives.

Speaker #2: The traditional channel expansion is a key growth engine, and it is already executed. In 2026, we're opening 430 new routes and adding 138,000 new points of sales across Mexico and Latam.

Speaker #2: We are also deploying in-store as media in 314,000 points of sale. So we are not just expanding coverage; we are activating it. In-store execution is the single largest contributor to our growth plan.

Speaker #2: We are ramping up the Perfect Store model and expanding the pharmacies recommendation program across independent pharmacies, supported by better brand visibility in-store. We have a particularly aggressive plan in analgesics.

Marco Sparvieri: We are ramping up the perfect store model and expanding the pharmacist recommendation program across independent pharmacies, supported by better brand visibility in store. We have a particular aggressive plan in analgesics, and we are preparing top-notch in-store executions for both the summer and winter seasons ahead. Innovation is what keeps our distinctive brand distinctive. In OTC, we are launching five new products that conquer new segments. In beverage, we are refreshing Sueros with a new image and opening new consumption occasions. In hair care, we're delivering improved clean performance and an expected routine. In skincare, we are democratizing high-end formulations with clean formulas and a refreshing scent. We are stepping up our media investment and rebalancing the mix toward a more efficient, more diversified structure with a stronger weight on digital.

Speaker #2: And we are preparing top-notch in-store executions for both the summer and winter seasons ahead. Innovation is what keeps our distinctive brand distinctive. In OTC, we are launching five new products that conquer new segments.

Speaker #2: In beverage, we are refreshing Xerox with a new image and opening new consumption occasions. In haircare, we're delivering improved clean performance and an expected routine.

Speaker #2: And in skincare, we are democratizing high-end formulations with clean formulas and a refreshing sign. We're stepping up our media investment and rebalancing the mix toward a more efficient and more diversified structure, with a stronger weight on digital.

Speaker #2: This is a conscious decision to put the investment where our consumer engagement is actually happening, and it directly backs the priority actions we just discussed.

Marco Sparvieri: This is a conscious decision to put the investment where our consumer engagement is actually happening, and it directly backs the priority actions we just discussed. E-commerce continues to be one of our highest growth channels. We expect to grow 30% in 2026, reaching 7% to 8% of consolidated sales and contributing MXN 310 million in incremental sales. We're invested in traffic generation tools and digital capabilities to sustain that trajectory. Before I close, I want to step back and anchor on our long-term trajectory. Over the past six years, consolidated net sales have grown at a 5.5% CAGR and EBITDA at a faster 8.8% CAGR. The faster EBITDA expansion is not an accident. It is the reflection of the compounded benefit of vertical integration, manufacturing, efficiencies, cost discipline, and the productivity program we have built over time.

Speaker #2: E-commerce continues to be one of our highest growth channels. We expect it to grow by 30% in 2026, reaching 7% to 8% of consolidated sales.

Speaker #2: And contributing 310 million pesos in incremental sales. We're invested in traffic generation tools and digital capabilities to sustain that trajectory. Before I close, I want to step back and anchor on our long-term trajectory.

Speaker #2: Over the past six years, consolidated net sales have grown at a 5.5% CAGR, and EBITDA at a faster 8.8% CAGR. The faster EBITDA expansion is not an accident.

Speaker #2: It is the reflection of the compounded benefits of vertical integration, manufacturing, efficiencies, cost discipline, and the productivity program we have built over time. The same operating model that delivered this track record is what will carry through this cycle.

Marco Sparvieri: The same operating model that delivered this track record is what we'll carry through this cycle. Let me leave you with four messages that summarize how we see the path forward. First, momentum is rebuilding at a lower than expected pace as Mexico sell-out remains pressured from a soft consumption environment. Second, increased investment is required to protect Mexico market share, and we expect short-term EBITDA margin pressure until the operational leverage normalizes. Our growth initiatives are starting to show early signs of recovery with year-to-date sequential market share improvement in Mexico. Third, LatAm remains a growth engine, with growth projects yielding clear results and a disciplined focus on winning initiatives. To close, we are executing on our growth initiatives, and we are seeing early signs of market share recovery. We understand where the concentrated issues are.

Speaker #2: Let me leave you with four messages that summarize how we see the path forward. First, momentum is rebuilding at a lower-than-expected pace as Mexico Cloud remains pressured from a soft consumption environment.

Speaker #2: Second, increased investment is required to protect Mexico market share, and we expect short-term EUDA margin pressure until the operational leverage normalizes. Third, our growth initiatives are starting to show early signs of recovery, with year-to-date sequential market share improvement in Mexico.

Speaker #2: Third, Latam remains a growth engine, with growth projects yielding clear results and a disciplined focus on winning initiatives. And to close, we are executing on our growth initiatives, and we are seeing early signs of market share recovery.

Speaker #2: And we understand where the concentrated issues are. We remain confident in our growth initiatives as we navigate the soft consumption environment. And we expect to be in a better place by Q2 and Q3.

Marco Sparvieri: We remain confident in our growth initiatives as we navigate this soft consumption environment, and we expect to be in a better place by Q2 and Q3. Thank you for your continued support. Tony, please go ahead.

Speaker #2: Thank you for your continued support, Tonio. Please go ahead. Thank you, Marco. And thank you, everybody, for joining. Marco mentioned Q1 was a challenging quarter.

Antonio Zamora Galland: Thank you, Marco, and thank you, everybody, for joining. As Marco mentioned, Q1 was a challenging quarter, particularly in Mexico and the United States, and our results reflect that. However, beneath the headline numbers, there are three things I want to take away from my remarks. First, our gross margin continued to expand, demonstrating that our productivity agenda is working. Second, Latin America is gaining momentum, with like-for-like sales growing 5.3% in the quarter. Third, our balance sheet and liquidity remains solid, giving us the financial flexibility to invest through this period and emerge stronger in the future. Let me now walk you through the numbers. Net sales were MXN 4.2 billion, a reported decline of 4.9% year on year. We all know that a large driver of this decline was currency. The Mexican peso appreciated 14% against the US dollar and also against many other currencies.

Antonio Zamora: Thank you, Marco, and thank you, everybody, for joining. As Marco mentioned, Q1 was a challenging quarter, particularly in Mexico and the United States, and our results reflect that. However, beneath the headline numbers, there are three things I want to take away from my remarks. First, our gross margin continued to expand, demonstrating that our productivity agenda is working. Second, Latin America is gaining momentum, with like-for-like sales growing 5.3% in the quarter. Third, our balance sheet and liquidity remains solid, giving us the financial flexibility to invest through this period and emerge stronger in the future. Let me now walk you through the numbers. Net sales were MXN 4.2 billion, a reported decline of 4.9% year on year. We all know that a large driver of this decline was currency. The Mexican peso appreciated 14% against the US dollar and also against many other currencies.

Speaker #2: Particularly in Mexico and the United States, and our results reflect that. However, beneath the headline numbers, there are three things I want to take away from my remarks.

Speaker #2: First, our gross margin continued to expand, demonstrating that our productivity agenda is working. Second, Latin America is gaining momentum, with like-for-like sales growing 5.3% in the quarter.

Speaker #2: And third, our balance sheet and liquidity remain solid, giving us the financial flexibility to invest through this period and emerge stronger in the future.

Speaker #2: Let me now walk you through the numbers: net sales were 4.2 billion pesos, a reported decline of 4.9% year-on-year. We all know that a large driver of this decline was currency.

Speaker #2: The Mexican peso appreciated 14% against the US dollar, and also against many other currencies. And this compressed the value of our international revenues, when consolidated into Mexican pesos.

Antonio Zamora Galland: This compressed the value of our international revenues when consolidated into Mexican pesos. On a like-for-like basis, stripping out the FX effect, sales declined only 3.9%. This reflects two specific headwinds. Continued inventory destocking and soft consumer demand in Mexico, and disruption in the US Hispanic retail channel. These were partially offset by solid underlying growth of 5.3% in Latin America. Put simply, our core business outside Mexico and the US is growing. The near-term noise is concentrated in just two geographies for reasons we understand and are actively addressing. In terms of profitability, as I mentioned, gross margin expanded 61 basis points to reach 63.4%, reflecting the continuing impact of our productivity and cost efficiency programs. This is a meaningful result to demonstrate that we are protecting our margin even as volumes are pressured. EBITDA margin was 22.8%, down 96 basis points.

Antonio Zamora: This compressed the value of our international revenues when consolidated into Mexican pesos. On a like-for-like basis, stripping out the FX effect, sales declined only 3.9%. This reflects two specific headwinds. Continued inventory destocking and soft consumer demand in Mexico, and disruption in the US Hispanic retail channel. These were partially offset by solid underlying growth of 5.3% in Latin America. Put simply, our core business outside Mexico and the US is growing. The near-term noise is concentrated in just two geographies for reasons we understand and are actively addressing. In terms of profitability, as I mentioned, gross margin expanded 61 basis points to reach 63.4%, reflecting the continuing impact of our productivity and cost efficiency programs. This is a meaningful result to demonstrate that we are protecting our margin even as volumes are pressured. EBITDA margin was 22.8%, down 96 basis points.

Speaker #2: On a like-for-like basis, sweeping out the FX effect, sales declined only 3.9%. This reflects two specific headways. Continued inventory stocking and soft consumer demand in Mexico and disruption in the US Hispanic retail channel.

Speaker #2: These were partially offset by solid underlying growth of 5.3% in Latin America. Put simply, our core business outside Mexico and the US is growing.

Speaker #2: The near-term noise is concentrated in just two geographies: for reasons beyond the span, and are actively addressing. In terms of profitability, as I mentioned, gross margin extended 61 basis points to reach 63.4%, reflecting the continued impact of our productivity and cost efficiency programs.

Speaker #2: This is a meaningful result. It demonstrates that we are protecting our margin even as volumes are pressured. Everyday margin was 22.8%, down 96 basis points.

Speaker #2: This reflects the impact of operating the leverage. On a lower revenue base, combined with deliberate investment in our growth initiatives and market share defense.

Antonio Zamora Galland: This reflects the impact of operating leverage on a lower revenue base, combined with deliberate investment in our growth initiatives and market share defense. We are investing to support the recovery. This is intentional, not structural. Net income was broadly stable at MXN 1,295 million, with net margin expanding 49 basis points to reach 11.8%. Lower financial expenses were the primary driver of this improvement, partially offset by higher inflationary losses in Argentina recognized under IAS 29. Moving on to the geographies. Mexico sales declined 8.6%, driven by ongoing inventory destocking at retail and soft consumer demand. Some positive offsets. Infant nutrition, and personal care both grew in the quarter in Mexico. Going now to the international. As we mentioned, the 14% appreciation of the Mexican peso created a strong FX headwind when consolidating the international figures.

Antonio Zamora: This reflects the impact of operating leverage on a lower revenue base, combined with deliberate investment in our growth initiatives and market share defense. We are investing to support the recovery. This is intentional, not structural. Net income was broadly stable at MXN 1,295 million, with net margin expanding 49 basis points to reach 11.8%. Lower financial expenses were the primary driver of this improvement, partially offset by higher inflationary losses in Argentina recognized under IAS 29. Moving on to the geographies. Mexico sales declined 8.6%, driven by ongoing inventory destocking at retail and soft consumer demand. Some positive offsets. Infant nutrition, and personal care both grew in the quarter in Mexico. Going now to the international. As we mentioned, the 14% appreciation of the Mexican peso created a strong FX headwind when consolidating the international figures.

Speaker #2: We are investing to support the recovery; this is intentional, not structural. Net income was broadly stable at 495 million pesos, with net margin expanding 49 basis points to reach 11.8%.

Speaker #2: Lower financial expenses were the primary driver of this improvement, partially offset by higher inflationary losses in Argentina recognized under IAS 29. Moving on to the geographies, Mexico sales declined 8.6%, driven by ongoing inventory stocking at retail and soft consumer demand.

Speaker #2: Some positive offsets: infant nutrition and personal care both grew in the quarter in Mexico. Going now to the international, as we mentioned, the 14% appreciation of the Mexican peso created a strong FX headwind when consolidating the international figures.

Speaker #2: In the case of the United States, local currency sales declined 9.7%, reflecting disruption in the Hispanic retail channel, as we've seen over the past few months.

Antonio Zamora Galland: In the case of the United States, local currency sales declined 9.7%, reflecting disruption in the Hispanic retail channel, as we've seen over the past few months, and a weaker than expected cough and cold season. Additionally, the 14% appreciation created a significant translation headwind when consolidating US results. We're working closely with our retail partners to stabilize distribution as well. Moving on to the other geographies, and as mentioned earlier, there was generalized FX depreciation of the local currencies against the Mexican peso, which, again, created a severe translation headwind for the region. Latin America, on a like-for-like basis, sales grew 5.3%, driven by strong execution in Central America and the Andean region. Reported growth was limited by broad FX depreciation of the local currencies across Latin America relative to the Mexican peso. The underlying businesses and momentum is real and encouraging.

Antonio Zamora: In the case of the United States, local currency sales declined 9.7%, reflecting disruption in the Hispanic retail channel, as we've seen over the past few months, and a weaker than expected cough and cold season. Additionally, the 14% appreciation created a significant translation headwind when consolidating US results. We're working closely with our retail partners to stabilize distribution as well. Moving on to the other geographies, and as mentioned earlier, there was generalized FX depreciation of the local currencies against the Mexican peso, which, again, created a severe translation headwind for the region. Latin America, on a like-for-like basis, sales grew 5.3%, driven by strong execution in Central America and the Andean region. Reported growth was limited by broad FX depreciation of the local currencies across Latin America relative to the Mexican peso. The underlying businesses and momentum is real and encouraging.

Speaker #2: And a weaker than expected profit and call season. Additionally, the 14% appreciation created a significant translation headwind when consolidating U.S. results. We're working closely with our retail partners to stabilize distribution as well.

Speaker #2: Moving on to the other geographies and, as mentioned earlier, there was generalized FX depreciation of the local currencies against the Mexican peso, which again created a severe translation headwind for the region.

Speaker #2: Latin America, on a like-for-like basis, sales grew 5.3%, driven by strong execution in Central America and the Andean region. Reported growth was limited by broad FX depreciation of the local currencies across Latin America, relative to the Mexican peso.

Speaker #2: But the underlying businesses and momentum is real and encouraging. Like-for-like sales in Latin America, I would say, is the highlight of the first quarter.

Antonio Zamora Galland: Like-for-like sales in Latin America, I would say, is a highlight of Q1. Moving on to cash flow and working capital. The cash conversion cycle reached 119 days, up just 3 days versus the prior year, driven by higher receivables and lower payables, partially offset by improving inventory. Improving working capital efficiency is a clear priority for the team in the coming quarters, and we expect to see progress as the consumer demand in Mexico normalizes. Free cash flow on a trailing 12-month basis was MXN 2 billion, down 31% year over year. This reflects lower operating income and higher working capital requirements in the short term. As we all know, we paid a quarterly dividend of MXN 0.20 per share, totaling MXN 200 million. We remain committed to our quarterly dividend, which reflects confidence in the durability of our cash generation.

Antonio Zamora: Like-for-like sales in Latin America, I would say, is a highlight of Q1. Moving on to cash flow and working capital. The cash conversion cycle reached 119 days, up just 3 days versus the prior year, driven by higher receivables and lower payables, partially offset by improving inventory. Improving working capital efficiency is a clear priority for the team in the coming quarters, and we expect to see progress as the consumer demand in Mexico normalizes. Free cash flow on a trailing 12-month basis was MXN 2 billion, down 31% year over year. This reflects lower operating income and higher working capital requirements in the short term. As we all know, we paid a quarterly dividend of MXN 0.20 per share, totaling MXN 200 million. We remain committed to our quarterly dividend, which reflects confidence in the durability of our cash generation.

Speaker #2: Moving on to cash flow and working capital, the cash conversion cycle reached 119 days, up just three days versus the prior year. This was driven by higher receivables and lower payables, partially offset by inventory improvements.

Speaker #2: Improving working capital efficiency is a clear priority for the team. In the coming quarters, we expect to see progress as consumer demand in Mexico normalizes.

Speaker #2: Free cash flow on a trailing 12-month basis was 2 billion pesos, down 31% year over year. This reflects lower operating income and higher working capital requirements.

Speaker #2: In the short term, as we all know, we paid a quarterly dividend of $0.20 per share, totaling 200 million pesos. We remain committed to our quarterly dividend, which reflects confidence in the durability of our cash generation.

Speaker #2: CapEx totaled 150 million pesos, with investment concentrated in our manufacturing plant and especially in the expansion of our distribution centers. Both are critical to our long-term operational efficiencies.

Antonio Zamora Galland: CapEx totaled MXN 150 million, with investment concentrated in our manufacturing plant and especially in the expansion of our distribution centers. Both are critical to our long-term operational efficiency. On the financing activity, we remained active in the local debt market throughout the quarter, issuing a little bit over MXN 1 billion across multiple tranches. These are all refinancing. In Mexico, we placed MXN 427 million in February, MXN 409 million in March, MXN 200 million, all of them with very attractive spreads, as you can see in this table. In every instance, we see the highest available local short-term ratings, F1+ from Fitch and HR+1 from HR Ratings. This is a clear market endorsement of our financial strength and a competitive cost of funding. As we mentioned, our balance sheet remains strong. Net debt to EBITDA stands at 1.3 times, nearly investment grade, and our debt service coverage ratio is 5.3 times.

Antonio Zamora: CapEx totaled MXN 150 million, with investment concentrated in our manufacturing plant and especially in the expansion of our distribution centers. Both are critical to our long-term operational efficiency. On the financing activity, we remained active in the local debt market throughout the quarter, issuing a little bit over MXN 1 billion across multiple tranches. These are all refinancing. In Mexico, we placed MXN 427 million in February, MXN 409 million in March, MXN 200 million, all of them with very attractive spreads, as you can see in this table. In every instance, we see the highest available local short-term ratings, F1+ from Fitch and HR+1 from HR Ratings. This is a clear market endorsement of our financial strength and a competitive cost of funding. As we mentioned, our balance sheet remains strong. Net debt to EBITDA stands at 1.3 times, nearly investment grade, and our debt service coverage ratio is 5.3 times.

Speaker #2: On the financing activity, we remain active in the local debt market throughout the quarter, issuing a little bit over 1 billion pesos across multiple tranches.

Speaker #2: These are all refinancing. In Mexico, we placed 427 million. In February, 409. In March, 200. All of them with very attractive spreads, as you can see in this table.

Speaker #2: Every issuance received the highest available local short-term ratings: F1+ from Fitch and HR+1 from HR Ratings. This is a clear market endorsement of our financial strength and a competitive cost of funding.

Speaker #2: As we mentioned, our balance sheet remains strong. Net debt to EBITDA stands at 1.3 times—clearly, investment grade. And our debt service coverage ratio is 5.3 times.

Speaker #2: We have the financial flexibility to fund our investment agenda while maintaining a conservative leverage profile. In closing, and to summarize, Q1 was a difficult quarter in terms of reported results.

Antonio Zamora Galland: We have the financial flexibility to fund our investment agenda while maintaining a conservative leverage profile. In closing and to summarize, Q1 was a difficult quarter in terms of reported results. The fundamentals of the business remain intact. Our margins are expanding, especially gross margin. Latin America is growing, our balance sheet is strong, and we are taking the right actions in Mexico and the US to stabilize performance and position the company for an eventual recovery. We are focused on what we can control, disciplined execution, working capital improvement, and continued investment in the initiatives that Marco has described. These initiatives will drive growth over the medium term. With that, I will try to come back to the operator to begin the Q&A.

Antonio Zamora: We have the financial flexibility to fund our investment agenda while maintaining a conservative leverage profile. In closing and to summarize, Q1 was a difficult quarter in terms of reported results. The fundamentals of the business remain intact. Our margins are expanding, especially gross margin. Latin America is growing, our balance sheet is strong, and we are taking the right actions in Mexico and the US to stabilize performance and position the company for an eventual recovery. We are focused on what we can control, disciplined execution, working capital improvement, and continued investment in the initiatives that Marco has described. These initiatives will drive growth over the medium term. With that, I will try to come back to the operator to begin the Q&A.

Speaker #2: But the fundamentals of the business remain intact. Our margins are expanding, especially gross margin. Latin America is growing. Our balance sheet is strong, and we are taking the right actions in Mexico and the US to stabilize performance and position the company for an eventual recovery.

Speaker #2: We are focused on what we can control. Discipline execution, working capital improvement, and continued investment in the initiatives that Marco has described and these initiatives will drive growth over the medium term.

Speaker #2: With that, I will try to come back to the operator to begin the Q&A—

Speaker #1: Thank you, Antonio. We will now begin the question-and-answer session. To ask a question, you may raise your hand using the 'Raise Your Hand' icon located at the bottom of your screen.

Operator: Thank you, Antonio. We will now begin the question and answer session. To ask a question, you may raise your hand using the icon, Raise Your Hand, located at the bottom of your screen. To withdraw your question, press the same icon at any time. This will be required in order to allow you to turn on your microphone and ask questions. One moment, please, while we hold for questions. The first question will come from Fred Mendes from JPMorgan. Please turn on your microphone to proceed with your question.

Speaker #1: To withdraw your question, press the same icon at any time. This will be required in order to allow you to turn on your microphone and ask questions.

Speaker #1: One moment, please, while we hold for questions. The first question will come from Froilán Méndez from JPMorgan. Please turn on your microphone to proceed with your question.

Speaker #3: Hi, guys. Sorry, I didn't see the button. Can you hear me now?

Fred Mendes: Hi, guys. Sorry, I didn't see the button. Can you hear me now?

Froylan Mendez: Hi, guys. Sorry, I didn't see the button. Can you hear me now?

Speaker #4: Clearly. Sorry. Clearly, Froilán. Thank you for your question.

Antonio Zamora Galland: Clearly, Fred. Clearly.

Antonio Zamora: Clearly, Fred. Clearly.

Fred Mendes: Okay.

Froylan Mendez: Okay.

Antonio Zamora Galland: Fred Mendes, thank you for your question.

Antonio Zamora: Fred Mendes, thank you for your question.

Speaker #3: Thank you. Thank you. So, given the, let's say, slower-than-expected evolution of the destocking in the first quarter, does this move your annual outlook on being able to recover some of the margin in the second half and maybe start seeing some growth, especially in Mexico, in the second half?

Fred Mendes: Thank you. Given the, let's say, slower than expected evolution of the destocking in Q1, does this move your annual outlook on being able to recover some of the margin in H2 and maybe start seeing some growth, especially in Mexico in second half? Should we expect that ramp up more into next year? Secondly, can you dig deeper into what is driving the performance in Latin America on a like-for-like basis, either country or product? Thank you.

Froylan Mendez: Thank you. Given the, let's say, slower than expected evolution of the destocking in Q1, does this move your annual outlook on being able to recover some of the margin in H2 and maybe start seeing some growth, especially in Mexico in second half? Should we expect that ramp up more into next year? Secondly, can you dig deeper into what is driving the performance in Latin America on a like-for-like basis, either country or product? Thank you.

Speaker #3: So, should we expect that ramp-up more into next year? And secondly, can you dig deeper into what is driving the performance in Latin America on a like-for-like basis?

Speaker #3: Either country or product? Thank you.

Speaker #4: Thank you, Froil, for your questions. On Mexico, the situation is the following: The plans that we discussed with you and with all the stockholders at the end of last year and the beginning of this year—we are executing those plans with a lot of discipline.

Antonio Zamora Galland: Thank you, Fred, for your questions. On Mexico, the situation is the following. The plans that we discussed, with you and with all the stakeholders at the end of the last year, and the beginning of this year, we are executing those plans with a lot of discipline. Okay? From a share point of view, you can see very early signs that these plans are actually starting to work. In every category, what you see is that versus where we were in 2025, in Q1, our shares are starting to recover. The problem that we are seeing, that I am seeing, is that the categories at a macro level are suffering beyond what I was expecting. I was actually expecting that the sell-out in Q1 was going to be flat in Mexico or growing slightly. Okay?

Marco Sparvieri: Thank you, Fred, for your questions. On Mexico, the situation is the following. The plans that we discussed, with you and with all the stakeholders at the end of the last year, and the beginning of this year, we are executing those plans with a lot of discipline. Okay? From a share point of view, you can see very early signs that these plans are actually starting to work. In every category, what you see is that versus where we were in 2025, in Q1, our shares are starting to recover. The problem that we are seeing, that I am seeing, is that the categories at a macro level are suffering beyond what I was expecting. I was actually expecting that the sell-out in Q1 was going to be flat in Mexico or growing slightly. Okay?

Speaker #4: Okay? And from a share point of view, you can see that these plans are actually starting to work in every category what you see is that versus where we were in 2025 in the first quarter, our shares are starting to recover.

Speaker #4: The problem that we are seeing that I am seeing is that the categories as a macro level are suffering beyond what I was expecting.

Speaker #4: So, I was actually expecting that the sellout in the first quarter was going to be flat in Mexico, or growing slightly. Okay? But the reality is that we declined in the first quarter.

Marco Sparvieri: The reality is that we declined in Q1. I was expecting that by Q2, we're going to start to see growth in Mexico. I now believe that that's going to be delayed at least to Q3. I do see that during this year, at some point, either Q3, Q4, we're going to start seeing the business growing. In terms of margin, at the beginning of the year, I presented a guidance of 23% to 25.5%, and given the current environment, both the macro environment and the competitive environment, because what we're suffering here in Genomma, in the business, is basically what every other player is suffering in the market, and everybody's reacting with more promotions, more discounts.

Speaker #4: Okay, so I was expecting that by the second quarter (Q2), we're going to start to see growth in Mexico. I now believe that that's going to be delayed at least to the third quarter (Q3).

Speaker #4: But I do see that, during this year, at some point—either Q3 or Q4—we're going to start seeing the business growth. Okay?

Speaker #4: In terms of margin, in terms of margin, at the beginning of the year, I presented a guidance of 23 to 23.5%. And given the current environment, both the macro environment and then the competitive environment because what we're suffering here in Genoma in the business is basically what every other player is suffering in the market.

Speaker #4: And everybody's reacting. It's reacting with more promotions, more discounts, there's a lot of activations at the point of sale because everybody's desperate to get their business back growing.

Marco Sparvieri: There's a lot of activations at the point of sale because everybody's desperate to get their business back growing or to grow further. We have to defend our market share, and that will imply that we're going to have to use some of the money that we have in our margin beyond the productivity savings that we just explained, and that will put a little bit of pressure in the margin, at least till Q2 and Q3. I do believe, and I feel very strongly, that this is going to be a short-term situation. I expect to go back to the 23% to 24% EBITDA by the end of the year or the beginning of 2027. In terms of LATAM, we have several countries and brands that are performing really well. Argentina is performing extraordinary.

Speaker #4: Or to grow further. And we have to defend our market shares, and that really implies that we're going to have to use some of the money that we have in our margin beyond the productivity savings that we just explained.

Speaker #4: And that will put a little bit of pressure on the margin, at least during the second quarter and the third quarter. I do believe, and I feel very strongly, that this is going to be a short-term situation.

Speaker #4: And so, I expect to go back to the 23 to 24 percent EBITDA by the end of the year, or the beginning of 2027.

Speaker #4: In terms of LATAM, we have several countries and brands that are performing really well. We have Argentina, which is performing extraordinarily. We grew in Argentina almost 100% versus the first quarter in 2025.

Marco Sparvieri: We grew in Argentina almost 100% versus Q1 2025. That market is doing really well. Remember that the inflation in Argentina is in the range of 30%. Growing 100% means significant growth in dollars. Peru is performing also really well. We had a very strong Q1 2025, especially the OTC business. Colombia and Central America are markets that are growing really fast. Yeah, we feel very confident on what's happening in several markets in LATAM. Perfect. Thank you so much, Marco.

Speaker #4: And so, that market is doing really well. Remember that inflation in Argentina is in the range of 30%. So, growing 100% means significant growth in dollars.

Speaker #4: Peru is performing, also really well. We had a very strong 2025, especially in the OTC business. Colombia and Central America are markets that are growing really fast.

Speaker #4: So yeah, we feel very confident on what's happening in several markets in LATAM.

Speaker #1: Perfect. Thank you so much, Marco.

Froylan Mendez: Perfect. Thank you so much, Marco.

Speaker #5: One moment, please, while we hold for questions. To ask a question, you may raise your hand using the 'Raise Hand' icon located at the bottom of your screen.

Speaker #5: To withdraw your question, press the same icon at any time. This will be required in order to allow you to turn on your microphone and ask questions.

Speaker #5: One moment, please, while we hold for questions. That concludes Genoma's first quarter results conference call. Thank you for your attention.

Operator: One moment, please, while we hold for questions. That concludes Genomma's Q1 results conference call. Thank you for your attention.

Marco Sparvieri: Adios.

Marco Sparvieri: ]Foreign language]

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