Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to today's Kimberly-Clark de México's Q4 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star and two. Please note, this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Pablo González. Thanks so much. Hello, everyone. Thanks for participating on the call. Our very best wishes for you and your families in 2024. But as usual, I'll make some preliminary remarks and pass it on to Xavier to provide details on the fourth quarter results, as well as for the whole year. We had a good quarter, and it capped a very good year. Let me start by providing some perspective on our fourth quarter sales. Excluding exports of tissue parent rolls, our sales grew 10%. Consumer products business grew high single-digit, driven by healthy volume growth. Professional posted double-digit growth, and our exports of finished product were more than double those of last year, albeit from a low base. All in all, our consumer and professional businesses continued to perform very well, with healthy volume and strong shares. Tissue parent roll exports on the contrary decreased substantially and were roughly half those of last year. This was due to increased internal tissue consumption and significantly lower prices due to excess capacity in the Far East and the lower exchange rate. This hard roll sales decrease impacted our top line by almost MXN 600 million and 550 basis points. On the bottom line, we again posted important increases, and we continued to improve margins. This result from a combination of higher volume and efficiencies, better raw material prices, and continued progress on our cost reduction efforts. For the year, we achieved record top line and bottom line, together with strong margins. Going forward, we expect our overall sales to grow and our bottom line to stay strong. Let me pass it on to Xavier to provide details on the quarter. Thank you, Pablo. Good morning. During the quarter, our sales were MXN 13.4 billion, a 4.5% increase versus the fourth quarter of 2022. Total volume was up 6% and price mix was down 2%. Net sales were boosted by consumer products and away from home, which grew 6.9% and 10.7% respectively. Year-over-year, consumer products volume grew 5.4% and price mix was up 1.5%. Exports were down 13.1% due to strong hard roll sales in Q4 2022. Converted products exports more than doubled. Cost of goods sold decreased 5%. Against last year, virgin and recycled fibers, SAM and resins were favorable, while fluff compared negatively. The FX was lower, averaging 11% less. Our cost reduction program once again had very good results and yielded approximately MXN 450 million of savings in the quarter. These savings are mainly at the cost of goods sold level and are generated by sourcing, materials improvement, and process efficiencies. Gross profit increased 22.9%, and margin was 40.8% for the quarter. G&A expenses were 19% higher year-over-year, and as a percentage of sales were up 207 basis points. Variable compensation accruals and distribution expenses are up, and we have strengthened the investment behind our brands. We are investing to improve our footprint and streamline our logistics operations. Operating profit increased 25.8%, and the operating margin was 23.8%. We generated MXN 3.7 billion of EBITDA, a 25.5% increase. EBITDA margin was 27.7%, a 60 basis points sequential improvement, and a 460 basis points differential versus the fourth quarter of 2022, underscoring our our focus towards margin recovery. Cost of financing was MXN 333 million in the fourth quarter, compared to MXN 419 million in the same period last year. Net interest expense was lower, since we have less net debt. During the quarter, we had a MXN 26 million foreign exchange loss, the same as last year. Net income for the quarter was MXN 1.9 billion, with earnings per share of MXN 0.63, a 35.7% increase. For the whole year, our sales were MXN 53.3 billion, a 4.4% increase and an all-time record. EBITDA was MXN 13.9 billion, also an all-time record, and was 26.1% of sales. Our margin increased sequentially every quarter. Net income was MXN 7 billion and represented 13.2% of sales. We had record savings from the cost reduction program amounting to MXN 1.75 billion, and Earnings Per Share for the year were MXN 2.28. During the year, we invested MXN 1.7 billion in CapEx, in line with our program, as we focused towards technology improvements, cost reductions and efficiencies, as well as capacity additions. We maintained a very strong and healthy balance. Our total cash position at the end of the year was MXN 19 billion. Our net debt to EBITDA ratio was 0.9 x. We had an EBITDA to net interest coverage of 9 x. Thank you. Back to Pablo. Let me make a few brief comments before going to Q&A. On the top line, the economy in general, and domestic consumption more specifically, continue to show resiliency. We expect job growth, wage increases, remittances, and handouts through social programs, together with higher spending in an election year, to help sustain this trend and continue to support growth in our categories. In addition, we believe our strong innovation pipeline, together with more effective investments behind the brands, will strengthen our market positions. On the cost side, we expect sequential increases, but raw materials will still compare favorably in the first half of the year. Continued growth in our most important businesses, a relatively stable cost scenario, together with the investment we're making to optimize our footprint and strengthen execution, as well as our consistent and effective focus on cost reductions, should allow us to achieve another strong year. We are excited with the opportunities we see going forward, and as always, we're committed and we'll be relentless in achieving our goals. Finally, at our February board and shareholders meetings, we will be proposing a double-digit dividend increase to recoup some ground, since in 2021 and 2022, we were not able to increase our dividend in real terms. With that, let me open the floor to questions. Thank you. At this time, if you would like to ask a question, please press the star and one on your touch tone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one to ask a question. We will pause for a moment to allow questions to queue. And we'll take our first question from Jens Spiess with Morgan Stanley. Your line is open. Hello, Pablo and Xavier. Thank you for taking my questions, and congrats on the very strong results. Just wanted to ask on the exports, how do you see them going forward? Will things have normalized? Do you see improvements? Sequentially, what can we expect there? Also, I missed the number you mentioned about volumes and mixed growth, if you could please repeat that. And also, any color on recycled fiber prices would be great. Thank you. Sure, Jens, thanks for being on the call. First on the export side, again, there's two sides to this: one, the part that has to do with the exports of finished product grew nicely in the fourth quarter from a lower base, but it grew nicely, and we expect that business to continue to grow and to contribute to growth overall in 2024 and in every quarter in 2024. So that part of this business is going well. On the sale of parent rolls, we expect that one to continue to be a drag as we will sequentially be increasing our volumes. But again, pricing is down because of a lot of imports from Asia into the U.S., given the low shipping rates and the overcapacity they have in Asia, plus the depreciation of the dollar versus the peso. So that will continue to be a drag going forward, but hopefully less so than it's been in 2023. When it comes to the breakdown between volume and prices, again, for the total for the quarter, where our sales were 4.5%, volume was up 6.3%, and price and mix was down 1.8%. For consumer products specifically, where sales were up 6.9%, volume was up 5.4%, and price and mix was up 1.5%. Away from home, if you also want that data, sales were up 10.7%, volume was up 6.7%, and price and mix was up 4%. Then finally on recycled fibers, we are seeing in recycled fibers and in pulp overall some pressure to the upside, so we expect sequentially to see some price increases. But again, raw materials will still be lower than last year, at least for the first half of the year. And then, there's a lot of volatility in the market, so we'll see what happens for the second half. So, sequential increases, but still lower than last year. All right, perfect. Thank you. Thank you, Jens. We'll take our next question from Bob Ford with Bank of America. Your line is open. Hey, thank you so much. Congratulations on the quarter and, and all the best in the new year. Pablo, can you give a little update on dynamics in less penetrated categories like the facial tissue, wet wipes, as well as some of the new application opportunities in nonwoven products? And if I remember correctly, you have some debt maturing later this year, and I was wondering how you're thinking about amortization versus maybe buybacks in addition to the big step up in dividends you're proposing. Thank you. Sure. Thanks for your questions, Bob, and likewise, all the best for 2024. Look, on penetration of some of the smaller categories, we had a terrific year on facial tissue with double digit growth. Wipes continues to grow very nicely. Kitchen towels also with double digit growth. So we're seeing some of the categories with lower penetration continue to gain share in the market and continue to grow in preference by consumers. So we expect that those businesses to continue to perform well in the coming years and over time, become a more important part of our business and a very profitable part of our business. So we'll keep on innovating on them and pushing them hard to make that happen as quickly as possible. On the nonwoven side, we continue to take a look at what else we can do with the technology, not only in terms of using it to continue to improve our products very aggressively, and we have some great plans on that this year, but also to see what else we can do with the technology. Plans are evolving nicely, but nothing that I can share more specifically at this point. But again, things continue to look promising. Did I understand correctly? Hey, Xavier, and just before I, Xavier. Yeah, go ahead. Go ahead, sorry. It sounded as if. It's just I want to get some clarification. It sounds as if there are some opportunities to improve existing products by adding- Absolutely. Nonwoven components. Okay, just wanted to make sure I understood correctly. Absolutely, because we continue to improve our technology, and we're bringing softness, we're bringing strength, and we're bringing other, Yeah qualities to our products. As we've done so in the premium segments, we'll probably start to trickle those down so we can expect quite a bit of improvements on our technology and in our products this year. It's exciting. Thank you. Hello, Bob. On the debt, you're right, we have a maturity early this year. It's in April. It's a U.S. 144A bond, $250 million, which with the hedges that we did at the time, it's gonna be about MXN 3.5 billion. We, if you recall, we pre-financed that with the securities that we placed last year, so we don't have the need to go to the market for this. This has been already pre-financed, as I said, as are the maturities for next year and even part of 2026. As to your question of financing this versus the dividend, I think it's very independent. We will be proposing a double-digit increase in the dividend to the board and the shareholders meeting, and we should have the funds, both from what we have already from last year's earnings and cash generation and what we expect this year to pay the dividend without the need for additional funding. Thank you. We'll take our next question from Rodrigo Alcántara with UBS. Your line is open. Hi, good morning, Pablo. Can you, can you hear me? Sorry. Yes, clearly. Yeah, thanks. Well, two questions here, if I may. The first one on consumer products. Quite impressive, the growth, 5.4% in volumes, right? Just currently, if you can comment here on what does this imply in terms of market share gains, both in terms of volume share gains and perhaps some value share gains? And, what would. I mean, if you can help me understand here on the commercial and pricing strategy that, you know, you have allowed you to grow this way, fair to say that it's, you know, considering the price increase of 1%, you're perhaps going a bit more promotional or is investments on your brands? Just to understand what is driving this volume growth would be very helpful. Also, very quickly on the CapEx, if you also, for 2024, expect any capacity additions for this year or will be pretty much maintenance CapEx? Thank you very much. Sure, Rodrigo. First on the volume and value shares, what I can say is that the 5.4% volume increase for the quarter meant that we gained share in our most important categories, and that was also true for the whole 2023. Again, behind our innovations and behind our commercial execution, our volumes are increasing and our shares are increasing as well. In terms of volume and price mix strategy, as you know, we pursued a strategy of increasing prices as we saw raw materials increase during 2022, early 2023. We have, for the most part, lapped those price increases. So going forward, as happened this past quarter, we expect a more balanced growth between volume and pricing going forward. Pricing and has two components, of course. We'll look at any additional pricing that we need to implement in the market, given some of the cost pressures that we might face. But on the other hand, also, we are very diligent in our revenue growth management program, and taking a look at every investment we make to make sure we get the most out of it, and that we maximize and optimize the use of our resources, and that also has an overall impact on pricing as we manage that way. So those are the two components. Hi, Rodrigo. For the CapEx, CapEx should be at around, again, between $100 million - $120 million. It will be a mix, a combination. It will include efficiencies, innovation, some capacity, not primary tissue capacity, but definitely converting capacity, and personal care products capacity, as well as additional tissue converting footprint and rationalizations. That's clear, and thanks, Pablo. Sorry it wasn't good. Thank you, Xavier, as well. Congrats on the quarter. You're welcome. Thank you. We'll take our next question from Ben Theurer with Barclays. Your line is open. Yes, thank you very much, Pablo, Xavier, good morning, and congrats on the results. The two quick ones I have: so one, you've obviously talked about the consumer environment and the strength into 2024. So as we think about it and the dynamics usually in election years is always a little more front-end loaded and not so much back-end loaded. So if you would have to kind of give us a split on your expectations, fair to assume that the first half is gonna make up for most likely an easier part of what the year is? And how do you feel about just post-election, if there's, like in prior years, some sort of a hangover risk or so? That would be my first question. Sure, Ben. I mean, hard to tell because, yeah, you're right. On the one hand, there's certainly gonna be more spending in the first half of the year, given that it's an election year. But overall, when you take a look at what's happening with the economy, in terms of job growth, wage increases, remittances continue to play a, an important part, handouts through social programs, direct and foreign direct investment, given the nearshoring. I mean, I think we overall expect a, a strong year, throughout. There might be a little bit more on the, again, on the spending for election early on, but I think some of the other factors might have a bigger impact in the second half of the year. So we expect the economy to perform relatively strong throughout the year, as has been the case actually in the past couple of years. In our case, comparisons are a little higher for the first half of the year than for the second half. So we'll see how it all balances out, but again, in the end, we expect to post another strong year in terms of growth and in sales and bottom line. Okay, perfect. And then, just on that, actually, my follow-up question is, like the growth you expect top versus bottom line, do you see potential of margin expansion, beyond what like that current level of already over 27% on EBITDA is? Are there anything, are there things that can be saved upon, or do you see tailwinds on FX cost-wise just to help you keep that margin at these levels or maybe even expand, like in prior years and very much in the past, you used to have sometimes higher periods of margins. So is 2024 potentially one of those years? Well, hopefully. I mean, we've got some tailwinds, as you mentioned, the exchange rate being one. Costs that are, at least for the first half of the year, will still be lower than last year. We need to figure out exactly how we move on pricing, and hopefully we can keep our volume strong, and that also brings quite a bit of benefit. On the other hand, again, sequentially, we will see some cost increases. So we've got some tailwinds, I think more than headwinds, but it's a little volatile. What I can tell you is that we expect our margins to remain strong, and if some of the scenarios that we're looking into do materialize, there is the opportunity that our margins can continue to strengthen, yes. Let me add my usual caveat of the FX. The wild card, right? Yeah. All right. Thank you very much, gentlemen. Congrats again. Thank you, Ben. Have a great year. Thank you. We'll take our next question from Renata Cabral with Citibank. Your line is open. Hello, everyone. Thanks for taking my question. I have two. Regarding the productivity program that you are taking and have already posted great results, could you maybe give some color on what exactly you could possibly do in 2024 for further improvements and the timing that we could see the benefits in the results? And my second question is related to possible trade downs in the consumptions in 2024. We saw that in 2023, that has not happened overall to your portfolio. Just to see your overall view for this for 2024. Thank you. Hello, Renata, and welcome to our calls. As you know, our cost reduction programs, mostly the improvements come from either access to new materials, new processes, product improvements, most of it comes from new technologies. So as far as we continue looking behind implementing those new technologies, and we invest in implementing them, because a lot of this comes from CapEx, we believe there's always going to be opportunities for more savings initiatives. For this year, we don't have a number yet, but we've been very consistent for the past seven, eight years in achieving somewhere around 5% of costs in savings. Of course, some of this is reinvested into product improvement, but we should be in that ballpark. Again, we don't have a number yet, and we are working hard to achieve it, and I think that's as much as I can tell you right now. Let me add a little bit on that, echoing what Xavier has said. I mean, just remember that in our case, it's really not a cost reduction program, it's a culture. And Kimberly-Clark, we've always wanted to be very, very lean, very agile, very frugal. So it's our culture always to look for productivity improvements and cost reductions. This past year, we saw great benefits from our footprint reoptimization and bathroom tissue, and, and those will carry into 2024. We will be doing some of the same in some other of our tissue businesses. And again, it's a constant. It's not that we have just a program, it's a constant that we're looking to optimize how we operate. Although we don't have a specific number for the year yet, as Xavier says, we have for many years achieved over 5% of costs. We have at least initially between costs that will come through from 2023 to 2024 and other initiatives that we have. I'm gonna say that at least we have identified already about MXN 900 million-MXN 1,000 million for the year. So again, we'll have another strong year when it comes to productivity and cost reductions. To your second question of the down trading, you're right, we have basically seen no down trading in general. This has been the case even in these past few years, where we increased prices significantly. Going forward, hard to forecast, but that's not something that we have on our cards at this moment. Thank you. We'll take our next question from Ulises Argote with J.P. Morgan. As a reminder, if you would like to ask a question, please press star one. Your line is open. Hi, guys. Thanks so much, and congrats on the strong results. Just to follow up there on the FX and Xavier's kind of caveat there. So anything around hedges that we should be aware for this year? Do you see maybe some opportunity there to do any hedge at the current levels? How are you thinking about that for the year? Thank you. At this moment, hi, Ulises. At this moment, we do not have hedges for the FX. As you know, we are always taking a look at those and seeing if there's a good moment to enter, if there's ever a good moment to enter. Because as you know, it's very expensive to hedge the peso against the dollar. It's about $0.11-$0.12 per month, so going one year forward costs you about MXN 1.5. Over long term, we've always thought that it's not very efficient, but as I said, that's something that we always keep on the radar and we take a look at. If we do something, we'll, you'll know in due time. All right. Super clear. Thanks so much. You're welcome. Thanks, Ulises. Once again, that is star and one if you would like to ask a question. It appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks. Thanks, and thank you all for participating in the call. Thanks for your questions. And again, our very, very best wishes for you and your families in 2024. We hope you all have a terrific year. Look forward to talking to you next quarter. Thank you. That concludes today's teleconference. Thank you for your participation. You may now disconnect and have a wonderful day!