Empresas CMPC SA

SGO:CMPC

Earnings Call Transcript

[Operator]

Hello, everyone, and welcome to the Empresas CMPC First Quarter 2022 Earnings Results Conference Call. On the call with us today are Fernando Hasenberg, Chief Financial Officer; and Colomba Henriquez, Investor Relations Manager.

[Operator Instructions] Please note that statements made today during the presentation and Q&A may include forward-looking statements to assist you in understanding our expectations for future performance. These statements are subject to some risks that could cause actual results and events to differ materially, and I'll refer you to the Company's press release and regulatory filings for discussions of those risks.

In addition, statements during this call, including statements related to conditions in the global pulp, personal care, forestry products and paper and packaging markets are based on management's views, as of today, and it is to be expected that future developments may cause these views to change. Please consider the information presented in this [ Slide ]. The Company may, at some point, elect to update the forward-looking statements made today, but specifically disclaims any obligation to do so, except where required by law.

And now I will turn the call over to Mr. Fernando Hasenberg, Chief Financial Officer. Please, Mr. Hasenberg, you may proceed.

[Fernando Hasenberg, executive]

Thank you, and welcome, everyone, to our first quarter 2022 results conference call. Starting on Slide #3 of the presentation. First quarter results continued to reflect the good pricing and operational environment for our businesses. The pulp business had a strong result with production reaching a quarterly record of 1.08 million tons and with pulp prices increasing again after a slight decline in the fourth quarter last year.

The Biopackaging business had another record quarter with EBITDA margin reaching 21% on the back of high average prices and improved operational efficiencies. The Softys business also improved its result compared to the previous quarter, also benefited by higher prices. All these resulted on EBITDA reaching $466 million, while net income reached approximately $250 million, showing an important improvement compared to last quarter results.

Now turning to Slide 4. Revenues for the first quarter posted a 3% sequential growth, driven by higher average prices in all business divisions. Operational costs reached a little over $1 billion, stable compared to the previous quarter and up 19% compared to the same period last year, which represented 61% of total revenues compared to 63% in fourth quarter 2021 and 62% in the first quarter last year. The year-on-year increase is mainly related to higher fuel and chemical costs for all businesses, as well as fiber costs for Softys and Biopackaging.

Consolidated other operating expenses reached $206 million for the quarter, 2% lower quarter-on-quarter and up 8% year-on-year, representing 12% of total revenues compared to 13% in last quarter and first quarter 2021. The quarter-over-quarter figure is explained by lower administrative expenses, partly offset by higher logistic costs. The year-over-year result is also related to higher logistics costs, partly offset by lower administrative expenses in Biopackaging and Softys.

Moving to Slide 5. On a consolidated basis, as I mentioned earlier, the Company's first quarter EBITDA reached $466 million, increasing 14% compared to the previous quarter and improving 33% compared to the same quarter last year.

Net income reached $251 million, showing a strong improvement compared to the $91 million reported last quarter and the $73 million reported in the first quarter 2021. This is the result of higher EBITDA generation during the quarter, as well as the positive effect registered on deferred taxes given the appreciation of the Brazilian real.

I would like now to turn the call over to Colomba Henriquez, our Investor Relations Manager, who will provide more details on our results by businesses.

[Colomba Benavente, executive]

Thank you, Fernando, and good morning, everyone. Please move to Slide 6, where we can see more details on our Pulp business results. Pulp production reached over 1 billion tons, up 4% quarter-over-quarter and year-over-year. The main reason behind this result are the better operational efficiencies at our mills and the fact that we did not have any scheduled maintenance during the quarter.

Total market pulp sale volumes increased by 3% quarter-over-quarter and 4% year-over-year. Looking into results by fiber, softwood third-party sales decreased by 4%, with lower sales to China and Europe and increased 4% year-over-year with higher exports to the rest of Asia and Latin America. Hardwood, on the other side increased 5% on a quarter-on-quarter basis and 4% compared to the first quarter of last year. In both cases, the higher volumes to Europe and Latin America. Inventories were mostly stable compared to the end of 4Q, '21 for both hardwood and softwood pulp.

Pulp prices during the first quarter of 2022 reached $809 per ton for softwood and $672 per ton for hardwood, a 7% and a 2% increase, respectively, compared to the previous quarter. Compared to the first quarter of last year, prices show an important improvement, increasing 16% for softwood and 25% for hardwood. As a result of this, revenues for the Pulp business totaled approximately $702 million, increasing 4% quarter-over-quarter and 26% year-over-year.

Looking to the Forestry segment, third-party forestry sale volumes decreased by 15% quarter-over-quarter, mainly due to lower sales of pulpwood and sawn wood and decreased 20% year-over-year, driven by lower sales of pulpwood and saw logs. Despite this, Forestry sales decreased only 3% quarter-over-quarter and increased 25% year-over-year, reaching $147 million. This is mainly the result of an improvement of average prices and a better product mix.

Revenues for our Pulp and Forestry business increased 2% compared to the previous quarter and 26% compared to last year, reaching almost $850 million. EBITDA improved 9% sequentially and 50% compared to 1Q, '21, reaching approximately $380 million, while EBITDA margin reached 45%. The quarter-over-quarter EBITDA increase was primarily due to higher average prices, as well as higher hardwood sales volumes. Also, we registered lower maintenance costs, as well as lower administrative expenses, which were partly offset by higher protection costs and higher cash costs. In the year-over-year comparison, the increase comes mainly from higher pulp prices, partly offset by higher administrative expenses and higher operating costs, resulting from higher cash costs and higher distribution costs.

Now let's move to Slide 7 to see further details on the Biopackaging results. Sales volumes to third party decreased by 1% quarter-over-quarter, driven by lower volumes of [ boxboard ] resulting from delayed shipments and a scheduled maintenance of the Maule mill. This was offset by higher seasonal volumes of corrugated paper and boxes, as well as molded pulp trays benefited by the first season in Chile. Year-over-year, volumes decreased 3%, explained by lower corrugated paper volumes driven by higher intercompany sales to our corrugated boxes business, as well as lower boxboard volumes driven by the reasons I mentioned earlier. This was partly offset by higher industrial boxes sales.

Average sale prices continued to increase this quarter, posting a 9% sequential increase and a 27% annual increase with all products showing significant increases. As a result, revenues increased by 9% quarter-over-quarter and 23% year-over-year, reaching $304 million.

The Biopackaging business EBITDA reached $64 million, increasing 25% compared to 4Q, '21 and 58% compared to 1Q, '21. EBITDA margin reached 21%, which is the result of a successful strategy that we have been implementing over the past years. The sequential increase in EBITDA is mainly driven by higher average prices. The annual increase also comes from higher average prices, which were able to offset the increase in raw materials, especially higher pulp prices and conversion paper.

Now let's move to Slide 8, where we will take a closer look at the Softys business. Softys revenues increased by 2% quarter-over-quarter and 14% year-over-year, reaching $578 million. Tissue paper sale volumes decreased 2% compared to the previous quarter and increased 2% compared to 1Q, '21. Quarter-over-quarter, lower volumes in Argentina, Chile, Mexico and Uruguay were partly offset by higher volumes in Brazil, Colombia, Ecuador and Peru. Year-over-year, most of the increase comes from Chile and Brazil. Volumes in most markets were partially affected by the increase in prices, which may translate into lower volumes for a short period of time.

Personal care product sale volumes were stable compared to last quarter and last year. The quarter-over-quarter result was driven by higher diaper sales in Argentina, Mexico and Peru, offset by lower feminine care products in Argentina, Mexico, Peru and Brazil. Year-over-year, we registered feminine family protection products in Brazil and Argentina, offset by lower wet wipes volumes in Argentina, Peru and Brazil.

Average sales prices measured in U.S. dollars increased 2% for tissue paper and 4% for personal care products compared to 4Q, '21, [ and increased ] 11% for tissue paper and 16% for personal care products compared to the first quarter of last year. In both cases, the increase was related to higher prices in local currencies. Also, some local currency appreciation during the first quarter, such as the Brazilian real and the Chilean peso positively affected U.S. dollar pricing.

Softys EBITDA reached $31 million during the quarter compared to $20 million in 4Q, '21 and $61 million in 1Q, '21. EBITDA margin reached 5.5%. The quarter-over-quarter increase was mainly from higher average prices, which were able to offset the slight increase in operating costs. The year-over-year decrease also relates to higher operating costs due to higher fiber costs, especially pulp and raw materials for personal care products, which was partly offset by higher prices in local currencies.

I will now turn the call back to Fernando, who will go through cash generation and financial execution for the quarter.

[Fernando Hasenberg, executive]

Thank you very much, Colomba. Please turn to Slide 9. Capital expenditures during the fourth quarter totaled $106 million, 60% related to maintenance, including forest management and the rest is mainly related to the BioCMPC project with roughly $30 million during the quarter.

Free cash flow was positive and close to $55 million during the first quarter of the year. This is a result of not paying any dividend during the quarter and the negative working capital variation. Working capital was mainly affected from higher account receivables driven by the increase in sales price for all our products.

On Slide 10, we see our financial execution and debt profile. We closed the first quarter of the year with $4.4 billion in total debt and cash of $1.3 billion, leaving our net debt in approximately $3.1 billion, which is roughly the same level, as a year ago and the end of 2021. The net debt-to-EBITDA ratio closed the quarter at 1.7x, continued to decrease compared to the previous quarter and the first quarter of 2021, driven by the increase in the last 12 months EBITDA.

I would also like to mention that on April 13th, we closed a $500 million syndicated loan structure, as a sustainable linked bullet loan with 6 banks, further deepening our sustainable financing journey. In addition, we paid the $500 million bond that was due in April.

Moving to Slide 11 of the presentation, I would like to commence some relevant events that happened during the first quarter. On April 12th, we took control of the forest and industrial asset of Iguazu in the States of Parana and Santa Catarina in Brazil. This acquisition included 3 production facilities with an annual capacity of about 120,000 metric tons of integrated sack kraft paper and 21,000 metric tons of specialty paper. Conversion lines that can produce 500 million units of paper stacks per year and approximately 1.9 million cubic meters of forestry assets. This acquisition is very strategic for the Company, as it not only make us the second largest producer of paper sacks globally, but it also mark our entrance to the Brazilian paper sack market.

Moving to Slide 12 of the presentation. On March 25, we had a fire at our Puente Alto mill, specifically at the corrugated paper machine, paper machine #20. [ Gladly ], fireman were able to control the fire very fast, and thanks to our safety protocols, we were able to evacuate all employees safely. We are expecting that the machine will remain out of service until September this year, and we are working to purchase paper in order to secure the supply of corrugated boxes to all our customers. It is also worth mentioning that the incident is covered by our insurance policy, both the physical damage and the production loss.

I would also like to comment that at the beginning of the year, we closed our work agreement with Nordic Bioproducts, a Finish startup that develops biomaterials. We are working with them to enhance the Norratex's process, which produces textile fibers using a variety of raw materials, including pulp. This is a mutually beneficial agreement for CMPC and Nordic Bioproducts, as it will allow them to test their technology using our pulp and expertise, and we also mark our entrance to the textile fiber business.

Finally, on April 1st, we received the FSC certification for our forestry assets in Argentina. This milestone allows us to reach 98% coverage of our forestry assets with certification, showing our commitment to our sustainable forestry management.

On Slide 13 of the presentation, 2022 started with a strong operational performance and with positive market trends, allowing us to deliver solid results and continue executing our strategy, best-in-class operational performance in our mills, procurement and commercial excellence, maintaining our relevance in the markets in which we participate through high profitability growth projects and focus on innovation, digitalization and sustainability to continue adapting and looking for opportunities in the bioeconomy.

We know this is the right path to guide us toward our long-term goals and to create share value to all our stakeholders. Thank you for your attention. Today, Raimundo Varela, CEO of the Pulp Division; and Francisco Ruiz-Tagle, CEO of the Company are here with me to answer your questions. But before jumping into that, Francisco will comment on some events that are occurring in Chile.

[Francisco Edwards, executive]

Thank you, Fernando. Good morning, everybody. This is Francisco Ruiz-Tagle, CEO of CMPC. Well, first of all, I wanted you to be informed about the situation that we are living now in Chile, connected with the trackers in the South of Chile, where we have operations. And so we are living in a situation that started probably almost a week ago with -- in different areas of the Araucania [ zone ], BioBio zone, there are some truckers claiming for security, and it has to be with some concrete insecurity events that they have had in the past with some attacks in some areas that are more complex today in Chile.

So we are now having some blockage in the roads -- in some roads, in the main roads of Chile, Ruta [indiscernible] and also in some rural roads and we did this blockage and we have -- it has been very hard to be sending the raw materials and especially woods to some mills, sawmills and pulp mills. They haven't blockage out our mills. They are not in the mills, they are in the routes, and they have been talking with government in order to get some solution for this insecurity situation. But still with -- in the discussion, although, the government announced yesterday that they already have an agreement with the truckers from different industries, I mean, mainly [ forest ] truckers, but also from other industries, but they are still in the -- stopped and they are still claiming for more security. So this situation is not solved.

And so because of this, and of course, we empathize with the trackers about the situation, but also it is very important for the country to start operating again. And so we want to have this solved very soon and especially connected with the security of the people that is working in the zone. And because of this situation, we now have probably to take the decision to stop some mills, if this -- if this situation continues, especially starting with some sawmills and plywood mills. And if this continue, we will be having problem probably in some of the pulp mills also because we are not -- we are having problems in receiving some raw materials, chemical raw materials or others.

So just for you to be informed, we hope really that this situation has to be solved, solved -- has to be solved. And -- but we don't know what is going to happen with that. There are also other companies announcing problems with the same situation because the roads are [ blockage ]. So this is more or less what I wanted to transmit to you. That's it.

[Fernando Hasenberg, executive]

Thank you, Francisco. Now Holly, we can start with the Q&A, please.

[Operator]

[Operator Instructions] Your first question for today is coming from Rafael Barcellos with Santander.

[Rafael Barcellos, analyst]

I have 2 questions. The first question, I mean, it's related to the road blockage that you just mentioned. Could you please elaborate further on the potential impacts on your pulp sales volume for the second Q? Also, could you comment about your current pulp inventory level?

And my second question is about the accident at your corrugated paper mill in Chile. Could you please provide an estimate in terms of impact on your EBITDA for the second Q or even the impact on your full year EBITDA?

[Raimundo Varela, executive]

This is Raimundo. I will take the first question. Regarding the blockage, I mean, I think this kind of situation, you have to evaluate them day by day. For the time being, I think it has no impact on our sales. But of course, if we have to stop a mill, it might impact depending on the amount that the impact will be equivalent to the number of days that we have to stop. [ If we have ] to stop for a week, we will lose that production. But at the time -- at this moment, it's not possible to tell you how many days we will have to stop because this situation evolves on a daily basis.

And regarding the -- our pulp inventory levels, we remain with inventory relatively high, higher than normal, about 70,000 tons in that range higher than normal due to the problems in the logistic chains that have meant delays, basically delays loading the vessels. So that -- I think we have more or less maintained that kind of over [indiscernible]. The party is fully committed, but we take some longer than normal to load the vessel.

[Fernando Hasenberg, executive]

Rafael, this is Fernando. Regarding the fire, we had in our corrugated paper machine, as I mentioned, we're having insurance. So all both the physical damage and the business loss is covered by the insurance. So we may have an -- a short-term impact, but at the end, we hope this will be solved by the end of the year. There shouldn't be a big impact on our financial statements because there are third parties involved here, specifically the insurance company, I would rather not share the specific cost or the impact. But -- but in -- let's say, in the medium, long term, this is not -- nothing material in that regard.

[Operator]

Your next question for today is coming from Thiago Lofiego with Bradesco BBI.

[Thiago Lofiego, analyst]

I have a few questions here. The first one is still on the road blockage. Sorry to insist on this, but what's the installed pulp capacity in that region be CMPCs or competitors? Can you help us just with some numbers there? Just trying to get a sense of the potential impact. I don't need you to tell me what the impact will be, but just to try to understand what's the pulp capacity in that region?

The second question is about -- for Raimundo about the status of the Chinese pulp market? So how are you seeing the paper production evolving in the short term? What's the visibility you have in China in the moment? And in this environment that we are seeing in China, do you think pulp prices have peaked? Or -- and do you think these levels are sustainable or not? So those are my questions here.

[Raimundo Varela, executive]

Thank you, Thiago. This is Raimundo. Regarding the road blockage, I will comment on our capacity. I'm sure that you can find out the other capacity on your own. We produce roughly about 6,000 tons a day in that region. So that's basically what we will eventually lost per day.

And regarding the Chinese pulp market, the situation is evolving every day. I think the market is still tight. We still have very good demand, and we are able to sell our pulp very quickly even with higher prices every month. I think the visibility we have -- I mean, so far, I think the mills continue to run. The paper market continued to operate. We -- our people in the ground tell us that the situation is slightly better than what it was a couple of weeks ago.

So again, I think that is also a situation that is evolving every day, and it's difficult to say whether the prices have peaked or not. I think at the end of the day, the prices this year have evolved mainly due to supply shocks and quite a good demand in the several -- in the several regions of the world. And I think we have a little bit more of the same at the current month.

[Thiago Lofiego, analyst]

Raimundo, can you repeat the pulp capacity number you mentioned?

[Raimundo Varela, executive]

6,000 tons a day.

[Thiago Lofiego, analyst]

It broke up. I'm sorry, I can't -- I couldn't hear you.

[Raimundo Varela, executive]

6,000 tons.

[Thiago Lofiego, analyst]

6,000.

[Raimundo Varela, executive]

Per day. That will be produced in Chile.

[Operator]

Your next question for today is coming from Jens Spiess with Morgan Stanley.

[Jens Spiess, analyst]

Just wanted to ask regarding the agreement for the -- for developing the port in Brazil. If you could give any more details in terms of the time line and how much CapEx you plan to deploy? And maybe even how much this would imply in terms of logistic cost reductions for you going forward once -- once that investment concludes?

[Francisco Edwards, executive]

Okay. Jens, this is Francisco. Well, [ we're ] still in the process of starting the project and some permission stage now, we are now in that process. And so well, yes, the thing is that this is a -- an important opportunity for CMPC considering that we have this project now in Guaiba, [ BioCMPC ]. And of course, for any -- any future initiatives that we could have, it is important to have this kind of port that is owned by a JV between Neltume, and they are experts in operating ports and CMPC. So that's the idea here. But now we are having ended -- still the process of a final evaluation, but already have presented to the authorities in Brazil, these initiatives -- this initiative, but it will take some time. This is not too quick this process. This is what I can tell you now.

[Operator]

[Operator Instructions]

[Colomba Benavente, executive]

Colomba Henriquez here. I'm going to -- we're going to take a question from the webcast. So can you please provide more details on what -- sorry, can you please provide some color on the process to complete the acquisition of Carta Fabril. Francisco is going to answer this.

[Francisco Edwards, executive]

Well, Carta Fabril, we just received an audit study, was approved by the CADE, anti-trust authority in Brazil. So we will start our process of taking the company and during the next weeks. This is the current situation of Carta Fabril.

[Operator]

You do have a question on the phone lines coming from Carlos de Alba.

[Carlos de Alba, analyst]

Can you hear me?

[Colomba Benavente, executive]

Yes, we can hear you well.

[Carlos de Alba, analyst]

So my question is, I was positively surprised by the expansion in EBITDA in Softys despite the increase in raw materials, particularly pulp. To what extent the increase in prices, realized prices that you saw was driven by FX? And to what extent it was more an effort of the Company to actually increase the price in local currency? And if there is any differences across markets that are worth highlighting, that would be great.

[Francisco Edwards, executive]

Thank you, Thiago, for -- Carlos -- Carlos. Carlos, thank you for your question. This is Francisco. Yes. Well, what I can tell you is that Softys has been in a very strong process since last year when we start having this importantly increases in raw material prices, with activities to improve the prices in the different markets, where we are participating.

So my answer to that is that we have been successful during the last [indiscernible], this year, basically, last month in improving the situation in the market, where we are participating and recovering in some way the margins, as you know, we were very affected because -- for the costs on general, on fiber and chemicals and the fuel, et cetera.

So answering your question, I would say that's much more important the effort that the Company is doing in improving some market prices. But of course, the [ revaluation ] of the local currency is also affecting in a positive way in the case of -- since they are -- they are selling basically in local currency, it's possibly affecting. But so those effects are important, but I would say, I give more importance to the price increases.

[Carlos de Alba, analyst]

All right. Thank you, Francisco. And any regions in particular, where you have been more successful in implementing the higher prices in local currency?

[Francisco Edwards, executive]

No, I would say that the situation is similar in the different countries, where we are participating. Some of them probably are taking more time, probably, Brazil is being more difficult for [ I mean ], for recovering margins compared with others. But in general, and all the markets are taking their -- the particular time very connected with the situation of a particular country. But in general, I would say, this is a -- this has been a strategy that we have been applying in every country.

[Operator]

You have a follow-up question coming from Thiago Lofiego.

[Thiago Lofiego, analyst]

Thank you for taking the opportunity here. Back to the pulp market, Raimundo, if you could just give us a little bit more color on Europe and other regions. So China, I understand the visibility is not the best right now. You mentioned there's a bit of an improvement. But can you talk about the other regions as well?

[Raimundo Varela, executive]

Yes. Thank you, Thiago. Demand remains very strong, I would say, in the other markets. Europe and also in the U.S. and Latin America. Europe, I think the short-fiber market is very, very tight. So in general, I think customers are taking their contractual volume and some of them need some extra [ pause ], and they are struggling to get it. So they are prepared to pay higher prices.

I think the Middle East is another region that usually does not contract all their volume, and they are struggling to get their volume, and therefore, they prepared to pay. The spot prices is maybe $50 or $60 higher than the index -- the index price. But again, I think, in particular, shot-fiber, is very, very tight in Europe.

Long-fiber, a little bit less because of the Scandinavian supply, but it's also solid, not strong. And in the U.S., I think similar also short-fiber is tighter -- tighter. I think -- and in Latin America, I think both fibers are relatively -- relatively tight. So I think we have seen good demand overall. But as I said earlier, I think these prices are also a consequence of supply shocks that you are well aware. And you don't have these prices only with a strong demand, that's not enough to have these prices.

[Colomba Benavente, executive]

We will now take another question from the webcast. This one is from Lucas Yang. Pulp costs have priced to the upside increasing less than competitors. Can you please give us more color on the outlook on pulp cost outlook? And how much downtime in the second quarter should impact volumes and costs?

[Raimundo Varela, executive]

Yes. We are very proud of the -- of our operational excellence program that we have implemented during the last year and as a consequence of that, I think we are able to improve every day a little bit our overall performance, I would say. I mean, cost is a consequence of stability. Of course, it's a consequence of consumption of the different raw materials. So there's a lot of components in the -- in the cost. There is no doubt that we are affected by some of the price of the raw materials, chemicals, fuels, et cetera, fiber, that is more, more expensive. I mean, our procurement team has also done a great job over the last years working alongside our operations in order to, again, to participate in this operational excellence.

In particular, I think during Q1, I think we benefit from the fact that we didn't have maintenance. I think that's a [ better ] situation that -- it happens in Q1. And I think in Q2, it will be different because we do have maintenance in both Santa Fe and in Guaiba, [ where ] larger mills. So it will be a little bit different. So again, I think in Q1, that's the situation. But again, I think we are pleased with our performance in operational excellence in the supply chain that has helped us to improve our operations, including the cost.

[Colomba Benavente, executive]

Thank you, Raimundo. We will take another question from the webcast. This one is from Alfonso Salazar. Can you provide more details on what are the security concerns that truckers are facing? Is this a structural change in security conditions? Or is it something that has reasonably changed?

[Francisco Edwards, executive]

Okay. I can answer that. This is Francisco. Well, yes, basically, what they're asking is more security in the region, more presence of the police and because there are some rural areas that has been affected because of the violence in some -- in the past and in the last weeks. So they're asking for more actually, basically, the presence of the people connected with the security of the country. So this is basically, I would say, the claim.

And this is a structural change now, I would say, no, this is a problem that we, Chile has been living for several years and for different governments, and the region of Araucania is affected for some claims connected with the Mapuche [indiscernible], they are -- they have some claims of land, they have some claims of a different kind of situation that they live in a very -- in a very poor region. So this is not a structural change now. So basically, this is a -- I would say, the claim of the truckers because they are [ living ] in the situation with some extreme people that is affecting their security.

[Colomba Benavente, executive]

We'll now take another question from the webcast. How does the agreement with Nordic Bioproducts provides CMPC exposure to the textile grade pulp market?

[Fernando Hasenberg, executive]

This is Fernando. I will take this. This is still a project. We have an agreement with this company. We are developing this solution. So at this stage, it doesn't make sense to calculate this on that -- on that way. We are learning here. This is a learning process. But in this industry, we plant trees, and we wait 15, 20 years to harvest them. So this is a long-term project. We are very positive about this, and we have very good expectations. Today, we cannot set a target in that -- in that way.

Okay. Holly, if there are no more questions, I would like to thank everyone for participating in this conference call, and thank you, Raimundo, Francisco for joining us as well.

[Operator]

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.