Good afternoon, and welcome to Alfa's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session with instructions given at that time. As a reminder, today's conference is being recorded. Now, I would like to turn this conference over to Mr. Hernán Lozano, Vice President of Investor Relations. Mr. Lozano, you may begin. Thank you, Laura. Good afternoon, everyone, and welcome to Alfa's First Quarter 2022 Earnings Conference Call. Additional details about our quarterly results can be found in our press release, which was distributed yesterday afternoon together with a summarized presentation. Both are available on our website in the investor relations section. Let me remind you that during this call, we will share forward-looking information and statements which are based on variables and assumptions that are uncertain at this time. It is my pleasure to participate in today's call together with Eduardo Escalante, Alfa's CFO, Roberto Olivares, Sigma's CFO, and representatives from each Alfa company. I will now turn the call over to Eduardo. Thank you, Hernán. Good afternoon, everyone. I hope you and your loved ones have remained safe and healthy. We are pleased to deliver another outstanding quarter led again by solid results from Alpek. Double-digit growth in first quarter revenue and EBITDA placed Alfa in a favorable position to exceed its initial 2022 guidance. Also important is the consistent progress with our unlocking value plan and our full commitment to this transformational process. With respect to consolidated financial results, first quarter revenue was $4.2 billion, up 24% over the same period of the prior year. Similarly, EBITDA increased 20% to $644 million, a record high first quarter for Alfa. By subsidiary, Alpek's results exceeded expectations once again as the positive momentum from 2021 carried over into this year. Specifically, Alpek continues to benefit from high reference margins across its core products of polyester, polypropylene, and expandable polystyrene. Solid demand, coupled with low marine freight availability, supported higher than expected petrochemical margins. In contrast, Axtel and Sigma were impacted by unexpected headwinds that resulted in lower EBITDA year over year. Axtel was negatively impacted by further delays in the implementation of customers' project caused by the global semiconductor shortage, lower government segment sales, and lower revenues from a large wholesale customer. For Sigma, headwinds included higher energy and input costs at the European operations, which Roberto will cover in more detail. I will now turn the call over to Roberto Olivares, Sigma CFO, to discuss the company's first quarter results and progress on the strategic initiatives. Please, Roberto. Thank you, Eduardo. Good afternoon, everyone. I hope you and your families are safe and healthy. Let's go right into the business update portion of the presentation for an overview of our operational and financial results, as well as recent strategic developments. Consolidated revenues reached $1.7 billion, the highest first quarter in our history, and 6% above year-on-year. These were driven by record first quarter figures in Mexico, the U.S., and Latin America, and they were partially offset by a decline in European revenues. Quarterly consolidated EBITDA was $161 million, an 11% decline year-on-year because of higher than expected cost increases due to the Russia-Ukraine conflict, as well as lower pork exports to China, which jointly impacted European operations. These results more than offset the solid performance of the other Sigma regions. Specifically, the conflict has caused significant energy and raw material cost increases in Europe, including a higher energy, fuel, meat, ingredients, and packaging. In response to this situation, our revenue management and global supply teams are taking all the necessary actions to mitigate these impacts. For example, we implemented the first phase of pricing actions and are in final negotiation for a second phase that will be fully executed in the next months. In addition, we are actively seeking alternatives to reduce energy consumption and achieve greater operational efficiencies. Overall, and despite this, results in the other business units, namely Mexico, the U.S., and Latin America, were better than expected. Therefore, our 2022 guidance remains unchanged. However, we will continue to monitor the situation proactively. Moving on to strategic initiatives. I want to briefly discuss the formation of Sigma's new advisory board. We believe that this is an important step to enhance long-term value creation as we advance towards becoming a fully independent business. Our world-class board is made of 13 talented individuals with diverse backgrounds and nationalities, 8 of whom are independent and 4 are women, with expertise that is closely aligned with Sigma's overall strategy. Their experience includes strategic planning, retail, nutrition, entrepreneurship, and ESG, among others, all of which we believe will greatly complement our overall capabilities. With regard to growth initiatives, this quarter we launched the third edition of Tastech by Sigma, our business accelerator that seeks to transform the food industry. New companies from all around the world will join the more than 490 startups from 32 countries that participated in the first two editions. During the quarter, we also began operating our third-party distribution and commercialization business that connects companies with nostalgia and specialty products from Mexico and Latin America with consumers in the U.S. by leveraging our Hispanic distribution network. To pilot this project, we reached three new partnership agreements to distribute snack wafers, granola clusters, and value-added guacamole packages to consumers throughout six U.S. cities. Our global plant-based brand, Better Balance, chose Spain, the U.S., and Mexico to roll out its product offering tailored to each community's local flavors. These products can be found at 300 establishments that includes restaurants, theme parks, stadiums, music festivals, and delivery platforms. Better Balance leverages decades of research and development and consumer preference knowledge to deliver its value proposition focused on taste, texture, nutrition, and flexibility. Moving on, we reaffirm our commitment to sustainability, an essential element for the long-term continuation of solid financial results and growth for the company. Because of this, we are including sustainability as a core enabler to advance integration of ESG criteria to everyday decision-making as we evolve the way we think, we work, and interact. As we face certain unexpected headwinds, our teams remains focused and is executing alternative actions to achieve the goals we have set for this year. All hands are on deck. We will continue pushing forward, bringing communities everywhere favorite foods to love. Thank you. I will now turn the call back to Eduardo for additional comments and closing remarks. Thank you, Roberto. As I mentioned at the beginning, first quarter results have positioned us ahead of our initial 2022 guidance. Based on the outstanding performance year to date and optimistic outlook, Alpek has increased its 2022 EBITDA guidance 32% to $1.4 billion. Sigma has left its guidance unchanged as the business is supported by solid performances in Mexico, the U.S., and Latin America. Axtel also maintains 2022 guidance, subject to potential revisions depending on future market developments. Taking all these into consideration, Alfa's 2022 EBITDA guidance was raised to $2.3 billion, 17% higher than the guidance we provided in February. As a reminder, this figure includes $115 million in extraordinary items from Alpek. Comparable Alfa EBITDA guidance increased 11% to $2.2 billion. A better-than-expected outlook reinforces our financial position, which provides a solid foundation to continuous Alfa orderly transformational process to mitigate its large conglomerate discount. A quick update on each of the three key implementation directives of our unlocking plan are, starting with reducing leverage. This is an important precondition to achieve the independence of Alfa's subsidiaries. Strong results coupled with financial discipline have driven significant improvement in financial ratios over the past two years. Consolidated net debt to EBITDA of 2.3 times represents an improvement of 64 basis points year-over-year. Even though our efforts to accelerate deleveraging via strategic alternatives have not materialized in a transaction, we continue seeking options in our shareholders' best interests. Moving next to strengthen the individual businesses. It is exciting to speak with you each quarter about the multiple actions the businesses have undertaken to boost long-term growth and capture profit opportunities. Roberto covered Sigma, so I will briefly touch on Alpek and Axtel. During the quarter, Alpek announced a transformational acquisition with the purchase of OCTAL, which will enable the company to forward integrate into the adjacent high-value business of PET sheet and accelerate its ESG agenda. Alpek expects to close the transaction by the end of the second quarter. Upon closing, Alpek estimates an $85 million EBITDA contribution from OCTAL during the second half of 2022. It is important to note that this figure is not yet included in the updated guidance for Alpek or Alfa. Axtel is actively engaged in projects to capitalize on attractive market opportunities. For instance, leveraging an unparalleled offering of cloud and cybersecurity services that helps companies transition towards hybrid working environments. Moreover, the company's mobility project, Alestra Móvil, is rapidly gaining traction as an attractive service alternative among mobile enterprise customers who benefit from its intelligent multi-operator connectivity feature. Axtel is also evaluating potential partnerships with interested parties in certain parts of its business to accelerate its strategic agenda. In terms of enhancing business independence, Sigma announced an important milestone in its journey to become an independent business with the formation of an advisory board, covered a brief moment ago by Roberto. At the Alfa level, Paulino Rodríguez, Senior Vice President of Human Capital and Services, retired during the first quarter following a very successful career of almost two decades at Sigma and Alfa. Paulino's enthusiasm and dedication in the development of human capital leave a long-standing legacy in our culture and values. After Paulino's retirement, the corporate functions of human capital and finance were merged. On a final note, related to enhancing business independence, first quarter expenses outside of our operating subsidiaries posted a 36% reduction versus 1Q 2021. We expect this improvement to continue throughout the year. Alfa held its annual shareholders meeting last month. During the meeting, the shareholders approved a dividend of $196 million, equivalent to $0.04 per share and 5% yield. Additionally, a share repurchase program for a maximum amount of MXN 5,800 million, or approximately $290 million was approved. This is aligned with our capital allocation strategy based on a disciplined approach to balance the leveraging, investing for growth, and returning capital to our shareholders. At the annual meeting, shareholders were also provided with an update on ESG initiatives, an area of high importance for all the companies. Noteworthy updates included Sigma achieving three of its 2025 sustainability goals several years ahead of plan. Alpek's increase in installed recycling capacity, reaching 268,000 tons of its 300,000-ton goal. Additionally, Alfa, Alpek, and Axtel recently published their 2021 integrated sustainability reports. Sigma released an executive summary ahead of the extended GRI version to be published shortly. We invite you to review these documents available on each company's website. In sum, 1Q 2022 was another exceptional quarter for Alfa, and I want to thank every Alfa team member for their role in helping us to achieve these very good results. This concludes my remarks. We are now available to take your questions. Hernán? We would like to begin the Q&A session with questions on Alfa. Eduardo and I will take questions on Alfa for corporate matters. Laura, please instruct participants to queue for questions on Alfa. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. One moment while we poll for questions. Our first question comes to the line of Vanessa Quiroga with Credit Suisse. You may proceed with your question. Hi. Good morning. Thanks for taking my question. About Axtel and the statement you made on the press release about strategic initiatives and partnerships for Axtel, can you tell us more details on what you are looking for? What's the update on a potential sale, partial sale of Axtel? Thank you. Sure, Vanessa, and thank you for your question. Let me begin by saying that we continue looking for ways to eliminate the conglomerate discount in Alfa. Certainly, the monetization of Axtel is and continues to be one alternative. However, in addition to the potential outright sale of Axtel, we have also engaged with interested parties in discussions to evaluate potential partnerships. The idea behind that is since we have not been able to close a transaction for Axtel, we want to explore the possibility of advancing the strategic agenda of Axtel through these partnerships. We are looking at some high value-added services and high market growth segments like cybersecurity and cloud, among others. We are exploring the possibility of doing partnerships with some other companies in order to accelerate our growth into this market segments. We are also continue negotiations regarding Axtel as a whole, as well as the infrastructure business unit. We are seeing a positive development in the market regarding the demand for services from our infrastructure unit, in particular, coming from the 5G technology deployment in some of the Mexican mobile operators, as well as the build-up of very large data centers, new data centers in Mexico. We are confident still that we'll be able to monetize either Axtel as a whole or a large portion of it, or do some transactions at some specific high value-added services. Still looking at both options. Okay. Are they exclusive? Are they... Is it one or the other? In some cases, we are talking to some interested parties that are looking at both options. In other cases, we do have some companies looking at some very specific services in particular. Thank you very much. You're welcome. Our next question comes from the line of Bernardo Malpica with Compass Group. You may proceed with your question. Hi. Thank you for taking my question. The first one is related to Axtel also. I mean, I know there is a lot of talks going on and all the information you just gave us. When could we see something a bit more definitive? Like, when could we get some more clearance in terms of Axtel? Because everything is a bit still in the air. The other question I had is regarding Alpek, the spin-off, the possible spin-off of Alpek. Also when could this come? I mean, could this come only after a decision is taken regarding Axtel? Or when could we see something regarding this as well? Thank you so much. Bernardo, I'll go into complementing my previous Axtel answer. Let me take this question from the Alfa point of view. Again, we can go into Axtel. First of all, let me assure you all that we remain fully committed to eliminating the conglomerate discount in Alfa. We think the current level of discount that we have in the prices of our shares is unreasonable considering the fundamental value of our businesses and the very good results that they are achieving. Having said that, we are taking full advantage of the optionality and time flexibility that we have today, coming mainly from the very good results and very strong balance sheets of our companies. As you know, and we reported, Alpek today net leverage is 1.0 times and Sigma is 2.5 times. Both companies have ample margins to support Alfa's unlocking value plan. Having said that, let me again mention that no specific time has been set, nor for Alfa, neither for a transaction in Axtel. We feel we do have a space to manage the holding debt maturities, which the first important one matures in 2024. We are looking at different alternatives and our board will make a decision when they are ready. We plan to continue making consistent progress in the three fronts that I mentioned before, reducing leverage with the potential sale of Axtel, but also with other alternatives such as the sale of the real estate that we have at the corporate level in Monterrey. We will also continue working on our core businesses such as OCTAL. The acquisition of OCTAL is a very good example of that. We'll continue working towards achieving business independence from our subsidiaries. We already mentioned several examples regarding that. Again, Bernardo, no specific time has been set. It is true that the sale process of Axtel has been affected. It has been much longer than what we anticipated earlier on, and has been affected by several factors. Global uncertainty is an important one of them, but also volatility, changes in the industry and what is going through in our country now have also affected. We'll continue pursuing it, both the outright sale as well as potential partnerships for some services, as I mentioned before. Our next question comes from the line of Gilberto Garcia with Barclays. You may proceed with your question. Hi, good afternoon. Thank you for the call. My question is on Alpek and the potential tax implications. Given that the price of Alpek's shares have gone up quite a bit year to date, does that necessarily imply that the eventual tax bill on an Alpek spin-off would be higher? Or are there alternatives that would mean that the tax bill is not entirely dependent on the share price at the time when you decide to do it? Thank you, Gilberto, for the question. The Alpek's price of the shares could have an implication regarding taxes depending on what we do and when we do it. As you know, the spin-off of any company in Mexico is treated like a sale from the tax point of view. The higher the benefit we achieve with this potential sale, if we decide to do something like a spin-off, it may have tax implications. In Alfa, we have historically been very conservative regarding our fiscal practices. We really try to make sure and comply with every regulation, both from our country as well as any other country where we operate. However, the tax cost will largely depend on how the companies become independent, if it's a spin-off or if we do something different. Our idea, as we did with Nemak, is we plan to disclose the tax implications when a deal is announced. At this time, again, no path forward has been decided. Thank you. Our next question comes from the line of Alejandro Azar with GBM. You may proceed with your question. Hi, good morning, Eduardo, Hernán. Just a quick one. You mentioned a lot of options regarding the reduction of your leverage at the holding level. My question is, out of all those options, is the refinancing of the $500 million 2024 bond an option to refinance that bond? We are aiming at not doing so, at least not fully, Alejandro, for the full $500 million. We think we do have flexibility before the bond matures in order to be able to at least not be in a position to refinance it fully. Probably a portion of it may be refinanced either to a new bond or to some other facility. We are not and we would not like to refinance it, in particular with a new bond. Okay, thank you. You're welcome. Our next question comes from the line of Federico Galassi with Rohatyn. You may proceed with your question. Hi, Eduardo, Hernán. Thanks for the call. Two questions regarding Axtel, continuing with the previous question. The first one is, if you maintain the guidance for this year, in particular in the revenue side. The second question is, when I see the debt in US dollars continue to going down, lower than in the past, but in terms of net debt to EBITDA, is increasing. Do you feel comfortable with this level? Maybe 2020 was the lowest level of the net debt to EBITDA. But do you still feel comfortable with this growth in this ratio? The second one is how the position in the from the debt side of the company side, if we continue to see a depreciation of the Mexican peso? Sure, Federico. Thanks for the questions. Regarding guidance, let me answer you and Adrian de los Santos is also here and I will turn it over to him in order if he has any comments. Let me begin by saying that we decided to, for the time being, maintain the guidance we have for the year for Axtel at the current level, $563 million in sales and $178 million in EBITDA. Since even though the quarter, as we mentioned, had some headwinds, we do expect to have some positive factors going forward. One of them is we see encouraging signs regarding the semiconductor shortage. We hope that the worst is behind us, and we are seeing slightly better supply times by the providers, and that allows Axtel to fulfill the contracts that we have already signed ahead of what the original expectation was. So that's a very good sign. The development, as I mentioned before, the demand growth regarding 5G and the installation of new data centers in Mexico is also a very positive factor that we are trying to take advantage of, as well as what we are doing regarding the new business lines, the internal reorganization we did, regarding the value-added service. In addition to those factors, we also have had a negative impact from Altán, the wholesale mobile customer that we have in the first quarter. The Concurso Mercantil process of Altán has been moving at a very quick pace the last few weeks, and we expect to have a clear picture going forward for the rest of the year of what the impact of Altán would be for Axtel. Let me mention that Altan represents 4%, less than 4% of the revenues of Axtel. Even so, it's an important customer that we need to clarify what the outcome of the Concurso Mercantil is in order to be able to have a better assessment of the impact in the year. Regarding the net debt to EBITDA for Axtel, yes, it is a little bit higher today than it was before. Today we are at 3.3 times. But that has a lot to do, first, with the first quarter. Traditionally, we do have an increase in working capital in the first quarter, and you can see that reflected in our numbers. In addition to that, also to the negative impact we had in the first quarter versus the previous periods. We are confident that we'll be able to continue managing the net leverage, and will come down the rest of the year. Adrian? Hi, Federico. Just to complement, acquisition has been trending up in recent months. That's positive for revenues in the second half of the year. That's something embedded in our guidance in our expected results. That will increase the expected revenues and EBITDA. Additionally, we have a positive cash flow. We have been generating cash flow. Yes, EBITDA has been affected. Eduardo mentioned the factors. We have been analyzing. We have no rush to do anything regarding our debt structure or maturities. It's by the end of 2024. We have time to decide when it's the right time to do some liability management or to do something regarding our senior notes. Our debt, it's three-quarters in dollars. The rest is in pesos. We managed to do active hedging, mostly on the cash flow in our interest payments and our CapEx obligations as well. We are actively trying to mitigate the foreign exchange risk on the current cash flows on the month-to-month cash flows. Okay, thank you so much. Our next question comes from the line of Rodolfo Ramos with Bradesco. You may proceed with your question. Thank you for taking my question. Just to follow up on the previous question on Axtel. Just to understand how this performance that we saw this quarter, you know, with infrastructure revenues down 20%, almost 20%, year-on-year. I mean, how does this affect the sale process? I mean, you mentioned in your previous answer about the bankruptcy process expected to conclude this year. I mean, does this weakness on whether it is infrastructure or for the whole part for the government side, I mean, does this performance impact this timeline on the sale? Thank you. Thanks, Rodolfo. No, we don't think so. We think it is clear what factors are affecting us this first quarter. It's not something that has anything to do with any structural change in Axtel and our position in the market. Again, we do expect the results to improve going forward. Thank you. You're welcome. Our next question comes from the line of Vanessa Quiroga with Credit Suisse. You may proceed with your question. Hi, my question is on Sigma. Can I make it right now or should I wait? Sure, Vane. We can ask Roberto to answer your question on Sigma. Okay, great. Thank you. About the advisory board, congrats on the talented people that you were able to recruit. My question is, what's the mission for the advisory board? And if it substitutes the Alfa board given, you know, the participation of Alfa board members in the advisory board in Sigma. And ultimately, what's expected to happen with regards to Sigma and a potential spin-off or listing? Thank you. Hi, Vanessa. Thank you for your question. The mission of the board is to be a strategic sounding board that supports the company to achieve its long-term strategy. Not necessarily covering the day-to-day operations, but more the long-term strategy. Help us discover and build the future, including the capabilities to get there. Obviously leveraging the knowledge that they have, the different perspectives, the points of view and backgrounds to help us achieve the strategy. In regards to the governance, as of right now, the company governance remains unchanged. As Sigma is wholly owned by Alfa, and hence reports to Alfa's board of directors. Eventually, when Alfa's unlocking value strategy, we might transform this advisory board into a board of directors. Thank you. Thank you, Vanessa. Our next question comes from the line of Rodolfo Ramos. You may proceed with your question. Hi. Thanks. I don't know if we switched to Sigma, but I have a question on Sigma. Go ahead, Rodolfo. Sure, Rodolfo. Rodolfo. Let's go ahead. We will switch to Sigma next, but you can go ahead. It's just I wanted to get your take on your expectation for price increases. You know, you increased prices 12% in Mexico. We have started to hear from the government these plans to at least institute a pact, and we don't know if it's gonna be a pact to cap prices, or if it will be, you know, something more rigid, like a cap on certain prices of certain goods. I just wanted to get your take on this and what could be the impact on your ability to continue these price increases to offset the input cost pressures. Thank you. Thank you, Rodolfo. First of all, maybe give a little bit of context. We participate in an industry that imports most of the raw material from the U.S. and thus is payable in U.S. dollars. Whenever we have a devaluation of the Mexican peso or an increase in cost, the whole industry moves into taking pricing actions. We, in particular, have the capability not only to take some revenue management initiatives to be able to be more precise when raising prices or giving promotions or discounts, but also we have the reformulation capabilities. That gave us a little bit of advantage in a sense that we can be able to reformulate the products in order to maintain the preference of our consumers and reduce costs if necessary. I will also mention, Rodolfo, that we have been working since the last three years in Mexico in expense-saving initiatives. We have been able to reduce expense in even real terms. With that, we also have the capability to put less pressure on margins and on price increases in order to maintain margins. Thank you. This reformulation, I'm assuming you are moving to a smaller presentations. Is that what? No, not necessarily. Reformulation means, for example, using, for example, powder milk instead of fresh milk or the contrary in cases which one is more cost-wise. Moving from, for some particular products that we market as being pork and poultry, moving from turkey to pork, et cetera. Changing some of the formulation of our products in order to maintain the preference of our consumers and reduce cost. Thank you. Okay. I would now turn this call back over to Hernán. Thank you, Laura. We will now take questions on Sigma. Roberto Olivares, Sigma CFO, will answer your questions. Please prompt for questions on Sigma, Laura. At this time, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Luis Yance from Compass. You may proceed with your question. Hi, Eduardo, Hernán, and Roberto. Thanks for taking my questions. I guess my first question is on Sigma. It's related to your guidance, you know, the fact that you kept it despite, you know, what we saw in the first quarter. Just trying to understand what are the main assumptions you're making for the remaining three quarters to get there, especially in terms of pricing initiatives beyond what you've already done. If you have any initiatives in mind, that'd be helpful to know. Also on cost, does that imply perhaps a pullback in some of the commodity prices relative to what we've seen? You know, when I look at first quarter results, you have margin compression year-over-year pretty much across the board. Does that assume a recovery of margins in certain regions or not? If you can help us understand what needs to happen for you from now on to be able to achieve the guidance, that'll be my first question. Okay. Thank you. Thank you, Luis, for your question. So let me start by saying that we kick off the year with better than expected results in Mexico, the U.S., and Latin America. We remain optimistic for the rest of the year in these regions. In regards to Europe, clearly the higher costs that resulted from the escalation of the conflict, it took a toll on this quarter's results. As I mentioned, we have already implemented first phase of price increases in the region that are not fully reflected on the first quarter results. We have ongoing negotiations to continue implementing a second pricing action phase, and that will be fully executed in the second quarter. We expect this, Luis, to allow us to close the gap with respect to our budget or our guidance throughout the year. We will continue passing cost increases in case if necessary, as again, these are factors that are impacting the whole industry. It is natural to expect more pricing actions if cost dynamics continue to rise. I will also highlight that we're working on efficiency and optimization projects to reduce cost and expenses. In some cases, this may include delaying some OpEx for non-essential projects. However, we acknowledge that the situation is still evolving, and we will continue to monitor it proactively. As of right now, we do expect to finish within range of our guidance release. Great. That's great to hear, Roberto. I guess a follow-up on that. Is it fair to assume that the biggest impact from a cost standpoint will happen in the second quarter, given that most of the sharp increases and all the issues actually started happening in the second half of the first quarter, and therefore, maybe you still had some inventory at lower prices, and therefore, you know, second quarter is when we will see the full impact? It might get more than offset by the pricing initiatives that you mentioned, but from a cost standpoint, is that fair to assume? Sure. I think from a cost standpoint, prices increased since the second half of the first quarter abruptly in all Europe, and they have stayed high since that moment. Since the first quarter had the first half of the first quarter not having those impact and the second half of the same quarter having the impact, you might assume that the second quarter in terms of cost we will have higher impact, but we will not have the prices that we didn't have in the first quarter, no. In the second quarter, we do have the first increase in prices that we did. We're working on the second increase in prices. As of right now, we already have some countries done the negotiations for the second phase, and some of the other will be fully executed by the end of the second quarter. We expect to have less impact on margin than on the first quarter. that lesser impact on margins in the second quarter relative to the first quarter also applies to some of the other regions or just to Europe? In the case of the Americas, we have not as of right now seen additional cost increases related as of right now to the Russia-Ukraine conflict. We do have for some particular raw material higher prices than last year, but those were already reflected before the conflict started, and we have already implemented price increases both in the U.S., Mexico, and Latin America to offset those cost increases. With that, we have maintained the margins, and we do expect to continue sustaining the margins in the Americas. Great. My last question, and I apologize if you already said that on your prepared remarks, but I wasn't able to connect that early. The lower pork meat exports to China, can you comment on that and whether that's an issue that it's already solved or it could resurface again in the future? Sure. Glad to give you an update on this topic. Since July of last year, we have mounted intense lobbying efforts with the Spanish government through the Ministry of Agriculture and the industry associations for them to directly contact the Chinese authorities and solicit their help in the process of re-homologation. It is important to mention that this issue must be resolved collectively with the Spanish government as it affects eight other meat companies in Spain and not only Campofrío Frescos. On the operational side, we have completed all the requirements asked by the Chinese authorities with regards to the export protocol, and we are in regular contact with our Chinese distributors to expedite the process from their side. In the meantime, our Frescos team continues to diversify and expand our client base to offset the volume impact. We have more than doubled our sales to other Asian countries like the Philippines and Korea, and we have also developed new markets in Africa, as well as started exporting to Mexico. Apart from this, we have launched initiatives to optimize the by-products and add value while finding new markets for this. Lastly, let me just comment that we're implementing cost and expense saving initiatives. For example, we have improved efficiency by concentrating plant operations from six to five days to save labor and energy. We have reduced the external storage expense by optimizing our in-house freezing operations. With that, I can say that we're working diligently to resolve the situation as soon as possible. Should I interpret that, you know, you still will have some issues in terms of exports to China in the second quarter. Hopefully in the second half, they might get resolved, and in the meantime, you're trying to diversify. Is that fair? That is correct. Great. Thanks a lot, Roberto. Thank you, Luis. Our next question comes from the line of Bernardo Malpica with Compass Group. You may proceed with your question. Hi, Roberto. I have a quick question regarding margin in Europe and results. I mean, I understand that on- I cannot hear. I don't know if- I think we lost Bernardo, Roberto. I would like to turn it back over to you, Hernán, for our next set of questions. In case Bernardo comes online again, please send him through, Laura. If not, I would like to move forward and take questions on Alpek and Axtel. From Alpek, we have José Carlos Pons, CFO. From Axtel, we have Eduardo Escalante, interim CEO, and Adrian de los Santos, CFO, who are available to answer any additional questions. Laura, could you please prompt for questions on Alpek and Axtel? Our first question comes from the line of Alejandro Azar with GBM. You may proceed with your question. Hi. Good morning. I was moved to this side of the questions. My question is for Roberto on Sigma, and it's a quick one. Just if you could tell us, Roberto, how fast can you increase prices in each region? I mean, I understand that it's harder to increase price at a fast rate in Europe and the U.S. when compared to Mexico and LatAm. Thank you. Sure, Alejandro. Thank you for your question. I think one important thing to consider is the different channels in which we participate in the different regions. In the case of Mexico, one channel that is a little bit faster to take some pricing actions is, for example, the traditional channel, where we have a direct sales distribution network that can implement a price increase faster than on a retail chain. Thus having those in Mexico make us increase price faster. In the case of Europe and the U.S., we have been working a lot through the different industry chambers with the relationship that we have with the retailers in order to expedite the negotiations and take on pricing actions whenever it's necessary. Usually, as I mentioned, these type of things happen to the whole industry, especially right now, inflation in Europe is happening not only to the meat industry, but to every sector on the shelf. Retailers are feeling the same pressure from all of their suppliers in order to increase prices. Thank you, Roberto. Thank you, Alejandro. Our next question comes from the line of Bernardo Malpica with Compass Group. You may proceed with your question. Sorry, Roberto. My phone got disconnected. So my question was regarding EBITDA margin in Europe. I mean, I get that on a consolidated basis, guidance remain the same. But I just want to understand if this comes from a better than expected results from other regions, or because Europe results will come back in the second half, and you will have really good results in Europe. Thank you. Sure. Thank you, Bernardo. I would say both, Bernardo. As of right now, results in the other two regions are better than expected. We also expect margin in Europe to recover throughout the year as we start to reflect the price increases that we have already done and continue reflecting those coming from the ongoing negotiations. Thank you, Roberto. Thank you, Bernardo. Our next question comes from a line of Gilberto Garcia with Barclays. You may proceed with your question. Hello again. My question is on the magnitude of the updated guidance at Alpek. Early in the year, sooner than your provisional update, only after the second quarter. Obviously a lot of moving parts with the energy prices, supply chain issues, and so on. While the update is obviously in the right direction, it could also be argued that it reflects the very limited visibility in the business. Do you think that might explain why the market is not reacting to the new guidance at this point? Thank you. Thank you, Gilberto, for your question. The guidance that we have provided reflects what we believe will happen in the year. As Pepe indicated in the call that we had in the morning, we still believe that the second half of the year could be potentially a little bit better, but we're not ready yet to confirm that the results could be better. In the end, we're improving our guidance significantly based on the fact that we had a strong first quarter, and we believe that the second quarter will also be strong. Answering your question, why the market is not reacting and the share is not recognizing that, well, it's beyond us. We believe that the valuation is quite attractive. Look at it from the performance of the company, look at it from the dividend yield. Well, you know, maybe you can do a better job explaining to your customers this. In the end, performance is quite strong and, well, we've been having the best two years in a row in the history of the company. Thank you for your explanation. Our next question comes from Alejandro Chavelas with Credit Suisse. You may proceed with your question. Hi, my question is on Axtel. Thanks for taking it. Just two simple questions. One is on the first quarter, to understand how much of the EBIT decline was explained by the semiconductor shortage, and how much by the one-off charge from Altamira, to better understand how it could look if semi shortages improve and without the one-off charge. Hi Alejandro. As we said in our call, the impact from the semiconductors was approximately MXN 40 million in the first quarter. So that's the revenues impact. On a margin basis, some of it is equipment sales, which on average have 20% gross margin. Recurring services have significantly higher margins. These were about half and half from each, so that's the effect in margin of contribution. On the impact from Altamira, we don't disclose specifics regarding customers' margins or similar. Additionally, that, as you know, there's a legal process with this customer, so we rather not comment on your question. Okay, thanks. Very, very useful. The second one, you mentioned that changes in the industry have affected the Axtel sale or the monetization process and also the results. I just wanted to understand like more broadly, what do you mean by these industry changes? Is it that software-based solutions have taken precedence over VPN or Ethernet, for example? Or did you mean on the mobile side, the consolidation that we are seeing in the industry? What are you seeing that was not expected in your industries? Hello, hello, Alejandro. This is Eduardo. No, what I was referring to was more regarding the global uncertainty and the situation in general with the emerging markets. As we have discussed before, some of the most interested potential companies are foreign investors and certainly they look closely at these type of factors that have been affecting their investment process as a whole. Okay. Understood. If I can push back a little bit, Eduardo, to better understand. Sure. We have seen several transactions in telecom and TMT of LatAm assets, no? For example, the KKR deal in Colombia, many asset sales in Central America and also in Mexico with the sale of Kio. There have been many transactions, so I don't understand why this transaction in particular was more affected than others. I don't know if it was more affected, but certainly they were able to close those transactions and we have not. Again, we'll continue pursuing it, but I can assure you some of those buyers have also been working with us and hopefully we'll be able to do something with one of them. Okay. Thank you very much, Eduardo. Congratulations. You're welcome. Hernán, there are no further questions on this section. All right, to turn it back over to you. Thank you, Laura. We do have one last question from our webcast participants, and this is for Alpek. This is from Edward Santevecchi with Bradesco. The question is: Any update on financing plans for the closing of OCTAL? José Carlos? Thank you, Hernán. Well, yes, as we indicated in our conference call, we are very close to closing the transaction. We have received all the relevant authorizations in terms of the trade commissions of each of the relevant countries. It seems likely that we will close the transaction during May, for sure during the second quarter. We have secured financing for that transaction. We already are in the final stages of signing the agreements with the relevant banks and, well, we will have the funds available for the closing of transaction. Great. This was our final question. We would like to thank you very much for your interest in Alfa. If you have any additional questions, please feel free to reach out to us. We would be pleased to assist you. We also extend our best wishes to you and your families to stay safe and healthy. Thank you very much for joining us today, and have a great day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and enjoy the rest of your day.