Good day and welcome to today's Coca-Cola FEMSA Second Quarter 2024 Conference Call. Throughout today's presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And now I'd like to hand the call over to your host, Jorge Collazo. Please go ahead, sir.

Thank you. Good morning, everyone. Welcome to this webcast and conference call to review our second quarter 2024 results. Joining me this morning are Ian Craig, our Chief Executive Officer; and Gerardo Cruz, our Chief Financial Officer. As usual, after prepared remarks, we will open the call for a question-and-answer session. Before we proceed, please allow me to remind all participants that this conference call may include forward-looking statements and should be considered good faith estimates made by the company. These forward-looking statements reflect management's expectations and are based upon currently available data. Actual results are subject to future events and uncertainties that can materially impact the company's performance. For more details, please refer to the disclaimer in the earnings release that went out this morning. With that let me turn the call over to our CEO. Please go ahead, Ian.

Thank you, Jorge. Good morning, everyone. Thank you for joining us today to discuss our second quarter results. Let me begin by saying that I am encouraged by the progress we are making across the priorities we set for the year. For the second quarter, we continued building on the growth momentum of our core business, increasing our consolidated volumes by 7.5% year-on-year while driving double-digit top and bottom line growth. We're also progressing on becoming our customers' preferred commercial platform with Juntos+. During the quarter, we finished rolling out the new version 4.0 of our app in our two largest markets, Mexico and Brazil, while beginning its rollout in Guatemala, Panama and Colombia. Now, more than half of our total customer base are digital buyers. Importantly, we are taking significant steps in deploying Coca-Cola FEMSA's principles, the foundation of the culture that we envisioned for our long-term growth and success. Although a positive quarter, our resilience and ability to respond to challenges was put to the test as we faced unprecedented flooding in the State of Rio Grande do Sul in Southern Brazil. I want to take a moment to express our heartfelt support to all of the people affected by these events and to recognize the leadership and swift actions taken by our team to ensure the well-being of our Brazilian collaborators as well as their families and to provide effective community support. Our team mobilized quickly to ensure business continuity and minimize disruption. I will expand on these actions later today when I touch on Brazil. During our call today, I will summarize our quarterly results and provide an update of key developments across our territories. Then Gery will walk you through our division's performance, closing with an update on the progress we are making to add…

Thank you, Ian. Good morning, everyone. Summarizing our division's results for the second quarter. In Mexico and Central America, volumes increased 8.1% to reach 695.6 million unit cases with volume growing across all of the division's territories. Revenues increased 15.3% to MXN45.1 billion. This growth was driven mainly by volume, performance and favorable mix effects. Our gross profit increased 17.8% to reach MXN21.9 billion, resulting in a gross margin of 48.7%, expanding 100 basis points year-on-year. Our operating leverage resulting from top line growth, improving packaging costs and favorable hedging initiatives were partially offset by higher sweetener costs and the depreciation of the Mexican peso. Operating income increased 12% to MXN7.3 billion, driven mainly by the gross profit performance I previously described. However, our operating margin contracted 50 basis points to 16.2%. This contraction was driven mainly by a non-cash operating foreign exchange loss generated by the depreciation of the Mexican peso, coupled with an increase in operating expenses such as labor, marketing and freight. Finally, our adjusted EBITDA in Mexico and Central America grew 20.1% with a 90 basis point margin expansion to 21.9%. Moving on to the South America division. Volumes increased 6.5% to 400 million unit cases. This performance was driven mainly by double-digit growth in Brazil and partially offset by a volume contraction in Argentina and Uruguay. Supported by this volume performance and revenue management initiatives, our revenues in the division increased 9.2% to MXN24.4 billion. These effects were partially offset by unfavorable currency translation effects into Mexican pesos, especially driven by the depreciation of the Argentine peso and the Brazilian real. When excluding currency translation, our total revenues in South America increased 22.3%. Gross profit in South America increased 16%, leading to a margin expansion of 240 basis points to reach 41.1%. As was the…

Thank you, sir. [Operator Instructions] Now the first question comes from Fernando Olvera from Bank of America. Please go ahead.

Hi. Good morning, and thanks for taking my question. I have two related to volumes. First, I would like to hear how are you thinking about your volume guidance after the strong demand seen in the first half of the year and what is your view for the remaining of the year? And my second question, if you can comment about your -- how is your market share behaving mainly your main key markets, Mexico and Brazil, would be great. Thank you.

Hi, Fer, it's Jorge here. Thank you for the question. I will take the first part of the question regarding volume outlook, Fer, because as you mentioned, I think we can -- and Ian and Gery mentioned during the call, we are very encouraged by the performance that we've had year-to-date, but we are at the half mark of the year. There is still a lot that we need to do across our operations to continue delivering and we have the plans to do that. But really no change on the volume outlook. I think we can maintain that outlook that we have mentioned of around mid-single-digit volume growth for the full year, okay. So at this time we think it will be too early maybe to change that. But as we said and I think the call really reflects this, we are optimistic about the outlook for the second half.

Okay.

And regarding share, Fernando. Yes, in Mexico, we have been impacted by share this year with continued supply chain shortages. So our stockouts and availability continue to remain high. We have irregular performance given the strong volume. And that has been what has impacted our share, especially in flavors and certain NCBs because when you have a limited production, you start prioritizing Coca-Cola brands and most profitable SKUs. So you see that hit in other less profitable or less key SKUs Fernando. In Brazil, our share has been very, very positive. Now we are starting to see this last month the impact of share losses in Rio Grande do Sul. So if you look at Brazil overall, it continues with very positive trends year-to-date. But if you drill down to the last month, we saw share losses in Rio Grande do Sul because unlike our competitors, our plan for the region went down. So if you look at the Brazil numbers from here forward, including last month, I think you'll continue to see strong gains in all of our territories and pressure in Rio Grande do Sul. Okay?

Okay.

If I can add one point there, Fer, regarding also share and capacity constraints, just to emphasize something that Ian mentioned during the prepared remarks, because as he said, he said, okay, we have capacity constraints, but it's important to say that this is a situation that is identified and that we are working on it. We added a new line in Mexico during March. There was another one that was relocated and started operations in June. And then there is another line that's coming in the second half of the year. So there are actions that are being implemented by the supply chain team in order to resolve this situation.

Yes, as well as obviously quite substantial investments in distribution capacity for Mexico as well.

Okay, perfect. Thank you so much.

Thank you, Fernando.

We will now take our next question from Diego Aragao from Citigroup. Please go ahead.

Good morning, Ian, Gerardo, Jorge, thank you for taking my question. I wanted to discuss two points here. The first one I wanted to hear a bit from you guys about costs. So what you're expecting maybe on a accretive basis or but for 2024, maybe 2025, just to see what you guys have for the outlook for the main commodities and hear a bit more about the hedges you have in place? And the second point would be a bit on the Brazil beer side, right. So just hear what you have to say about like overall industry dynamics in the short-term, the overall consumer environment, brand performance, whatever you think is interesting to share with us. So, yeah, that's it. Thank you, guys.

Thank you, Diego. I'll start with the first one regarding costs in our hedging position and maybe Jorge and Ian can complement on the second one regarding beer in Brazil. But as you know and we've discussed before, for hedges we have this process in which we usually maintain both hedge position in a rolling 12-month period for both our FX components on dollarized raw materials as well as the price of the raw materials itself. And this allows us to provide better certainty to our operators so they can focus on bringing in the unit cases. Having said that, we have currently a position regarding FX for 2024 or the rest of 2024 in Mexico, Argentina, above 60% of our exposure of dollarized raw materials is covered. For Brazil, Colombia and Uruguay, a little above 40% of our requirements are hedged for the year. And we already started in this process 12-month rolling period hedging the first half of 2025 exposures where we're starting to build positions. Regarding raw materials, the prices of raw materials itself, we have a very good position in hedging sweeteners. Sugar both in Brazil and Uruguay where we have active hedging positions are close to 100% of our requirements for 2024 hedged, with a good position as well for 2025 above 50% of our requirements. HFCS in Mexico, a similar situation where we're close to 90% of our requirements hedged. And we have a good position for aluminum in Mexico and Brazil above 60% of our requirements as well as plastic PET in Mexico above 50% of our requirements for the year.

All right. In terms of beer in Brazil, I think what we're seeing there is with a flat market in terms of volume, there's a lot of pressure going around to the beer players and intensified competition. So we see really, really intense competition with some key brands holding prices since last year. In that picture, our volumes have been very challenging and we have held our share. I think it's declined 0.2 basis points in terms of -- 20 basis points in terms of share of value. So what I would say is as long as that market continues to be flat, I think there's going to be a very intense competitive scenario as the two large beer players compete to hit growth again.

Very clear, thank you.

We will now take our next question from Rahi Parikh from Barclays. Please go ahead.

Awesome. Thank you so much. I'm coming in for Ben. Can you give more color on the impact from a slightly weaker consumer? I think you said more sensitive consumer, I assume from lower spending -- lower government spending in Mexico. Maybe some stats on the slowdown in purchases in June and into July, if possible, or any other comments on consumer elasticity by region? Thank you so much.

Hello, Rahi, and send our regards to Ben, please. I would say across our region where we see pressure on the consumer would be Colombia and Argentina. So those are here, the two markets where we see pressure. We are seeing a softer environment this month in Mexico, but so far from what we see, I think it relates directly to weather because, as you know, our business is impacted by precipitation. And usually, the first things that see softness are water and then a little bit in single serve. And that's exactly what we're seeing in this month. So I would not think that that has to do with consumer strength in Mexico because there's still practically no unemployment. All projects keep chugging along. So our rate so far is consistent with more of a weather related softness. Does that make sense, Rahi?

Yes, for sure. Thank you so much.

Thank you. We will now take our next question from Lucas Mussi from Morgan Stanley. Please go ahead.

Good morning, everyone. Thanks for taking my question. I have one on South America margins. You guys delivered an EBITDA margin which was quite strong on the quarter of more than 20 -- more than 200 bps year-over-year. So I just wanted to better understand what was the drivers behind the strong margin performance. We understand that sweeteners were still a headwind, packaging costs were more favorable, but just wanted to hear more thoughts on the color of magnitude around the cost components. Also, is it safe to say that at this point, with today's print, that it's reasonable to expect that perhaps we're going to be closing the year with more healthier margins than we previously expected in the beginning of the year or I don't know, perhaps we could see a cost curve that's a little bit tougher for next couple of quarters? If you could share any comment on that would be very helpful. Thanks, everyone.

Thank you, Lucas. I'll start with the margins in South America. Certainly, we saw better performance and this is a result of the model that we are strategic priorities as we established them when we started this journey of leveraging on our operating capabilities. So growing our business and the sustainable growth model that we are all focused on and working on allows us to capture the benefits of margin by growing our scale. We expect this to continue to be the case in the long-term, which is our bet and where we're working towards. Certainly, we've seen a better outlook in cost structure that we had previously expected in our business plan. And we expect specifically from sugar in Mexico to see a better outlook in sugar prices towards the end of the year. Slightly better, I wouldn't think that it would be a significant change, but certainly less worrying that what we had expected initially. Regarding our expectations for the full year, I think, we're still a little bit waiting to see how things continue to develop. I don't think we're ready to send out different expectations in terms of maintaining flattish sort of margins for the year as compared to last year's.

Thanks, everyone.

Thank you. We will now move to our next question from Felipe Ucros from Scotiabank. Please go ahead.

Thanks, operator, and good morning, Ian, Gery and team, thanks for the space. A couple of questions on Juntos+, if I may. The first one on loyalty. As you've been developing Juntos 4.0, you've also been delving deeper into the loyalty programs for your consumers. Just wondering if you can give us a first look on how this is going. Perhaps you can comment on adoption [Technical Difficulty] from your clients and what differences you're noticing between clients that are using the loyalty platform versus those that are not using it? And perhaps if you can give us an update also on the fintech side of things. I know you've been working on partnerships across the region, so just wondering if you have any updates on that. Thank you.

Hello, everyone. I think relating to our loyalty program, we have some numbers on the uplift in volume between clients that are participating in the loyalty program. Clients that don't -- I don't have them top of my head, so I don't want to mention those, Felipe. But we do see a significant uplift. So the more that we can be rolling out the adoption, the better that this is for us. And when we walk the market and you talk to clients, you hear all sorts of positive comments regarding the loyalty program like from anecdotal things like, oh, finally you guys remembered us. So it's -- you can tell that it has an effect on when they decide to purchase from another site or from a wholesaler versus continuing to add points in our program. And you have to remember that this program's cash conversion cycle is very, very short. Because immediately as they put in the order, they can see that the points that they have, they quickly redeem. And you're talking about two or three days where they end up selling these products. Let's say they redeem it for a case of coke or any other products and it immediately translates into cash, Felipe, is what I'm trying to say. So it's a very positive tool for us. It has surprised us and it's going very, very well. Gery, do you want to comment?

Yes. Very quickly, I have the numbers for Mexico where we have deployed our loyalty program that Ian was mentioning and we have had a great performance with 750,000 customers already online with our loyalty program across our operations.

Thank you. We will now move to our next question from Alejandro Fuchs from Itau. Please go ahead.

Thank you. Good morning, Ian, Gerardo, Jorge and team congratulations on the results. Thank you for the space for questions. I have two very quick ones from my side, maybe a follow up on the volumes. We have seen very strong volumes in Mexico and Brazil for quite some time now. So I wanted to maybe see if you could help us understand how much of this being influenced by Juntos+, how much is multi category? How do you see these new digital initiatives adding to the core platform in terms of growth? And the second one, maybe for Gerardo real quick, just want to see if I understood correctly in terms of the one-off that you had on the quarter. You said that in Mexico, in terms of the non-cash impact, was MXN400 million. And then in Rio Grande do Sul, the impact, maybe we can think about around MXN200 million. I don't know if that sounds correct. Maybe you could clarify that would be very helpful. Thank you.

Yes, Alejandro, thank you for the question. It's Jorge and I'm going to start with the first part. I think something that we are seeing and we have been discussing with the team, for example, in Brazil, and in Mexico, about the upside of Juntos+. Of course, these are analyses that are being done when we, for example, separate a cluster that is being served by Juntos+ and another that is not.

It's very hard now because it's basically all over now to make those control tests.

But during control tests and bigger, we have seen an upside of around 6% is more or less what we're starting to see with Juntos+. And, of course, it's a combination of factors, what we have seen to drive these very positive volumes. For example, in Mexico, I think something that we continue to see that has been a driver of volumes has been, as Ian mentioned. When we think about the macro, low unemployment, it's something that we continue to see across our territories and we continue to see this strong demand. And beyond this low unemployment, we're also seeing remittances. We're also seeing, of course, increases in real wage. So that is also bringing this positive environment. And on top of that environment, we are executing on the plans. So Juntos+ has been one. I would say multi category is still small in relative terms. We continue to be more or less to what we have been updating in the previous calls, which is more or less around 1% of our revenues. It's about 1.3% of our revenues today on a consolidated basis. That is multi-category, but it's certainly helping us.

I think multi-category, we have the proof points of countries where it has been there for a while, such as Brazil with beer. And countries -- small countries like Central America, Europe, where you get the complete distribution of all channels with most of the partners where you have countries already at 3% to 3.5% of revenues. So I think that the roadmap is there. Our target, our ambition is to get to 5% of revenues, but it is a moving target in the sense that our base business continues to grow very, very fast. So it's a good problem to have for that percentage to grow to be relevant because our base core business continues to deliver solid top line growth.

Regarding Juntos+, just to expand a little bit on your question, Alejandro, the two encouraging findings that we're getting from what we're doing, especially in Mexico and Brazil, is getting enough lift in the number of SKUs that customers are buying. And that makes sense because they have more time to place their order on their own time. And the second is the average ticket per transaction, which is also -- we're also seeing an uplift there. So that's encouraging and we're excited about that. Regarding your other question on the non-cash operating expenses. Exactly, in Mexico, that was the amount of the impact of the FX depreciation in the end of June, MXN400 million that we saw going through our P&L this quarter, affecting operating income, but not EBITDA. In the case of Brazil, the number -- the net impact that we absorbed in the quarter was MXN130 million, a little bit below the MXN200 million number that you had in mind.

Thank you very much. It was very clear.

Thank you. We will now take our next question from Lucas Ferreira from JPMorgan. Please go ahead. Your line is open.

Hi, guys. Good morning. Thanks for your time and congrats on the results. Once again, a follow up on volumes. It's been very surprising how fast volumes are expanding. And then especially in an environment where, for instance, in Brazil, market share is growing and your capacity is somewhat limited. How to think about pricing? I have a sense that this category had much less pricing over the last two years than others. If you look at food inflation, if you look at, I don't know, beer, for instance, had a much bigger hikes. So wondering if -- in a year of probably lower cost or easier costs, that was something a strategy of keeping prices somewhat in line with inflation? So my question is basically, how to think about pricing from here? If you see room for an improving mix or even adjusting overall pricing, if that's something that you have in mind? And another question on Argentina, I think you also had a good volume performance relative to many other companies that operate in the region. So wondering how you see the environment in the country, if there's anything different you're doing or how to think about the quarters to come if you see already a rebound or what to expect basically for the next, I don't know, 6, 12 months. Thank you very much.

Thank you, Lucas. I'll jump on the first one regarding pricing. The name of the game for us is sustainable growth. And in that sense, our focus is to maintain a balanced strategy and look towards revenue per unit case to grow that in line with inflation across our markets. We have a new capability with the digitization of the business and Juntos+ to be able to personalize portfolio and execution and that allows us to maximize value both for us as well as our customers. We will continue to prioritize certainly the competitiveness of our portfolio. We're focusing on being able to grow our volumes sustainably in the long-term. We will continue to drive affordability and foster single serve growth to be able to get the benefit of the mix in pricing on our P&L. And the last one, we are expecting a more benign raw material environment as we move towards the second half, especially in sugar. That had been a source of pressure for us. So that will also provide a relief in terms of allowing us to be more active in our revenue management.

I think just complimenting Gery in line with your -- probably what you're thinking is, yes, when we do have, for example, unavailability issues, we practically zero our promotions in those SKUs because there's not enough there to supply. So you see some effects of adjusting the tactical calendar to basically canceling out any sort of promotion or tactical activity other than what we have by contracting in the modern trade. So you see some effects of that also filtering through. In Argentina, I believe we took a slightly different strategy to other players in the sense that we believe this crisis is temporary. We've seen it happen recurrently in Argentina where even under scenarios with not necessarily the best government measures, the country recovers. And we think right now the government is taking very good and appropriate measures. So we're very confident. And in the recovery, we're actually quite optimistic in Argentina. So the strategy that we implemented was, we didn't want to lose household penetration or consumer preference. So we made sure we focused on having affordability initiatives there, maintaining our household penetration and we're ready to face what we thought were going to be 9 to 12 months of an impact. I think we've seen the initial share impact that we had in the first couple of months quickly be reversed. The volume traction or decline is smaller and smaller and smaller each month. So I think good days ahead for Argentina, but still we expect a tough year this year and a return to growth next year. I think we -- it's safe to say that we see it improving month over month, but the country faces a large challenge. And you can see the effects, rate gap, it's not going to be a straight line of improvement. So there are challenges there, but our operation continues to improve month over month and I think we hit on the right strategy.

Super clear. Thank you very much.

Thank you. And we will now take our next question from Alvaro Garcia from BTG. Please go ahead.

Hey, gentlemen, thanks for the space for questions. Two questions. One on Guatemala. I was wondering if you could zoom out a bit and just maybe discuss per capitas and sort of what's driven -- what seems to be just sort of this perpetual double-digit growth we've seen there for quite some time now, consumer strength, et cetera? And then on Argentina, just zooming in on what you were just talking about, Ian, where are we in the battle against multi-serve? Or how can you take a crisis like this to sort of maybe try to shift consumer behavior away from multi-serve, if that is indeed a strategy at all? Thank you.

I'll start with Argentina and then go over Guatemala. So with Argentina, just to keep with the flow of the prior question, it's one of the few markets where you see the impact of increasing returnable mix. So once you see consumers are feeling the pinch, usually the mix of returnables increases. So we're seeing that in Argentina. You're also seeing the relationship with multi servers as well. But it's very minor in margin, maybe 60 basis points of an increase in multi servers. Not that -- it's not that big, Alvaro, where I do see the switch is within one way to multi serve presentation where you do see a big move in Argentina towards returnables. It's the one market where you see that increasing. Moving onto Guatemala. Yeah, that question on per caps.

I think, Alvaro, maybe just to clarify, can you repeat the first question? I think it was related to per capitas, right, but we just wanted to make sure, if you can repeat the first question to make sure we get it right.

Yeah, just trying to sort of wrap my head around the very strong volume growth we've seen out of Guatemala over the last several years now. And I'm assuming per capitas have bumped significantly higher. So maybe reviewing that would help, but maybe a discussion on disposable income and sort of occasions and how maybe that's changed over the last five years. Just reviewing the strength out of Guatemala would be very helpful.

I mean, I think we've talked about this in the past, Alvaro. We're still -- we used to be, I think last year it was around 180 or 190, right now we're at 220. So, I mean, per capitas are still low enough. We still have a lot of legroom in per capita. And I think one of the beautiful things in Guatemala is it's a very large and very young population with stable income growth and a lot of remittances. Something that's been surprising to me is the strength of remittances there, the importance of remittances. So it's just a country that's getting wealthier and wealthier and wealthier. Very stable, very pro-business. Employment is up. They're even getting some near shoring in textiles. So to us, I mean, there's no reason that Guatemala shouldn't double in size. That's our view. So it's a very good business and we're working to make that happen. And we've been -- one of the best products was the new plant and capacity expansions and those were filled almost immediately. There's a lot of upside to remain in Guatemala, of course. The percentage trend, as it's natural, will start to decrease over time, but there's still plenty of upside to that territory, however.

Another --

And just one last one. And it's just a jewel of a territory as well in the mix of single serve being very, very high. So it's really a good place to be in. Sorry, Gerry.

Another important component, just to compliment Ian, Alvaro, is that in Guatemala in the past few years, we've gained an important amount of share. In Guatemala, we had headroom in shares, specifically in colas. As you know, that's our biggest right to win with brand Coca-Cola. So we've gained a significant amount of share these past I guess --

Four of five endpoints. It's a lot of shares.

Yeah.

Great. Thank you very much.

Thank you.

Thank you. We'll now move to our next question from Ulises Argote from Santander. Please go ahead.

Thanks for the space for questions. So, just to understand a bit better, do you have something to share around what is kind of the ballpark in terms of million unit cases that you're adding to the pipeline with this seven lines that you were mentioning that you're rolling out this year? And do those kind of seven lines leave you in a comfortable level for production? Or should we expect more additions of lines or maybe even plants in some regions in the coming years? All of this, obviously, with the very strong demand that you guys are having. Thank you.

Thank you, Ulises. The number that we have in expansion and capacity, specifically manufacturing, is creating 15% additional capacity in three-year period that started in 2023. So '23, '24, by the end of '25, we expect to have 15% more capacity. As you know and you've seen in our reports, we've been outpacing our initial projections. So we'll probably be adjusting that capacity creation as we move forward marginally probably a little above that 15% new capacity. In terms of distribution capacity, there we have the ability when we're surpassing capacity to be able to rent third-party assets, trucks, warehouses. So we're a little bit more behind in distribution capacity, there we're expecting to increase distribution by 30% in that same period of time. And just in terms of new plant releases, what we're trying to do is saturate our current facilities. But eventually we will need a new plant to serve the Southeast territory of Mexico. So as long as we can keep adding lines to our facilities, that's the way to go. But we will be triggering at some point a full new greenfield for Mexico and at some point for Brazil as well.

Okay. Super clear. Thanks a lot, guys.

Thank you. And we will now take our final question in queue today from Thiago Bortoluci from Goldman Sachs. Please go ahead.

Yes, good morning, everyone. Thanks for taking the question and congrats on the results. Look if I were to put everything that you said and everything together, right, what we're seeing is mid-single-digit volume growth for the year and better cost, right, probably because of your FX hedges, demand apparently continues to be super solid and we're facing some capacity constraints, right? So if I were to imagine the second half, the back end of the year and you have been indicating mid-single-digit volume growth and aim to get stable profitability, where the upside risk with this combination, right? I think we've been running above expectations. And the question is more to get a clear view, right? With this capacity constraints, should we eventually expect that Coke FEMSA will take this opportunity eventually to push margins a little bit higher? Thanks.

Yes, thank you, Thiago, and thanks for the question. I think around, yeah, getting around the capacity constraint is something that definitely the team is working on. As Gery mentioned during his prepared remarks, he highlighted that just this year we are installing seven new lines. Most of them have been installed already. And this is only for 2024, right. But there is more on the plan for 2025 and so on. As you know, there is some investments that we are doing on the CapEx. In this period of time, we have guided that it's going to be between 8% to 9% of our revenues. So there is significant projects there that are coming. Also, Ian, referred to that. And I think the summary you made for the expectation of the second half of the year are correct. I think we have guided for a full year that we expect volumes to be on the mid-single-digits. We are seeing, as you mentioned, a more benign environment on the cost front. We have implemented our hedging strategies and the team is executing on both the commercial, the supply chain. So things are going well, but at the same time, we maintain the outlook of margins. We are more focused on the growth side of the equation than on protecting the profitability. That's one way, I would say, to put it. So, yes, definitely. I think that after the first six months of the year, we are more optimistic about potentially having some upside potential, probably in profitability. But as Gery mentioned, we're at the half mark of the year. So the summary, I think, is correct. Mid-single-digits, volume growth and margins should be on the flattish side. And, of course, we cannot forget that in the second half of the year, we could have some volatility effects or other things. I think this year, the first half has also been a reminder of that. Volatility can come. Weather has happened in the south of Brazil and those kind of things, we cannot forget that those things can happen. So that's why we are optimistic on the outlook, but at the same time, we maintain the outlook that we have set for the full year.

Yes. As always. Thank you, Jorge.

Thank you, Thiago.

Thank you. With this, I'd like to hand the call back over to Jorge Collazo for closing remarks. Over to you, sir.

Well, thank you very much, everyone, for joining us on today's call. As always, myself, Lorena and Marene are available for any of your remaining questions. And also maybe a very quick announcement regarding the IR team. Marene who has been part of the team, she's moving to a new role in strategic planning within the company. So, Marene, thank you very much for your support. Since 2020, you have been a very valuable member of the team. I know you know the analyst very well. So thank you, Marene, and good luck on your next role. Thank you, everyone.

Thank you.

Thanks.

Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.