Earnings call transcript: Kimberly-Clark de México Q2 2025 sees flat sales, explores new markets

Kimberly-Clark de México, with a market capitalization of $5.89 billion, reported its second-quarter 2025 earnings, revealing flat sales compared to the previous year, alongside a decrease in gross and operating profits. Despite these challenges, the company is optimistic about future growth, driven by product innovations and strategic market expansions. Notably, the company is entering the pet food industry and considering new ventures in the shampoo category. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.

Key Takeaways

• Q2 sales remained flat at 14.1 billion pesos, while gross profit decreased by 9.7%.
• The company plans to expand into the pet food market and explore the shampoo category.
• Cost reduction efforts saved approximately 500 million pesos.
• Mexican consumer spending is slowing, impacting volume growth.
• Kimberly-Clark de México maintains a strong market position through a multi-tiered product strategy.

Company Performance

Kimberly-Clark de México’s Q2 performance showed resilience in a challenging economic environment. While sales were flat year-over-year at 14.1 billion pesos, the company faced a 9.7% decline in gross profit, attributed to a 3.3% decrease in total volume. The price mix improved by 3.3%, partially offsetting volume declines. Despite these challenges, the company remains committed to its innovation strategy and market expansion plans.

Financial Highlights

• Revenue: 14.1 billion pesos (flat year-over-year)
• Earnings per share: $0.62
• Gross Margin: 38.2%
• Operating Margin: 21.7%
• EBITDA: 3.6 billion pesos (11.5% decrease)
• Net Income: 1.9 billion pesos
• Cash Position: 11 billion pesos

Outlook & Guidance

Looking ahead, Kimberly-Clark de México expects volume growth to accelerate in the coming quarters. The company is focusing on innovation and strategic adjustments to navigate the slowing Mexican economy. Additionally, it anticipates more moderate raw material cost pressures and is exploring export opportunities, particularly to the U.S. market.

Executive Commentary

CEO Pablo González Guajardo remarked, "We’re in the first mile of a marathon," emphasizing the company’s long-term growth strategy. He expressed confidence in the company’s ability to improve volumes over the coming quarters and highlighted the importance of serving clients and consumers effectively.

Risks and Challenges

• Slowing Mexican economy and private consumption could impact future sales.
• Volume growth in key categories like diapers and bathroom tissue remains flat.
• Consumers are trading down to lower-priced products, affecting premium sales.
• The professional/away-from-home segment is experiencing a significant slowdown.
• Potential impacts of new labor laws on operational costs.

Q&A

During the earnings call, analysts inquired about inventory management strategies and the dynamics of consumer trading down. Executives also addressed potential labor law impacts and explored export opportunities and tariff implications.

Full transcript - Kimberly Clark De Mexico A (KIMBERA) Q2 2025:

Conference Coordinator: Thank you for calling. Please have your conference ID ready, and a coordinator will be with you momentarily. If you require assistance during your program, please press STAR zero, and a coordinator will assist you.

Thank you for holding. Maverick Conference ID, please. Oh, okay. Can I get the spelling of your last name and your first?

And.

The name of your company, please?

Thank you.

A pleasure to be on this conference.

SA Sam. Please stand by. Your program is about to begin. Good day everyone and welcome to the Kimberly-Clark de México 2Q25 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 1 on your telephone keypad. You may withdraw yourself from the queue by pressing STAR and 2. 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 Mr. Pablo González Guajardo, CEO. Please go ahead.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thank you. Hello everyone. Hope you’re having a good summer. Thanks for participating on the call. We’ll go straight to results, and then we’ll make some comments about the quarter and our expectations going forward, as well as update you on some important initiatives underway.

Thanks, Pablo. Good morning everyone. During the quarter our sales were $14.1 billion pesos, basically flat versus last year, 1.7% higher than the first quarter and an all-time quarterly record by a couple of million. Total volume was down 3.3% and price mix was up 3.3%. Consumer products and away from home decreased 2.2% and 7.8% respectively. Exports were up 24.5% with double-digit increases in both converted products and hard rolled sales. Cost of goods sold increased 7.2% against last year. Salmon resins were favorable. Virgin fibers were mixed while recycled fibers and slough compared negatively. The FX was significantly higher, averaging 17.3% higher. Our cost reduction program once again had very good results and yielded approximately $500 million pesos 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 decreased 9.7% and margin was 38.2% for the quarter. Mix was negatively affected by an increase in lower margin hardware sales. SG&A expenses were 3.6% lower year over year and as a percentage of sales were down 60 basis points. Operating profit decreased 13.9% and the operating margin was 21.7%. We generated $3.6 billion pesos of EBITDA, an 11.5% decrease as we had anticipated. Even with the significant peso depreciation, we were able to maintain our EBITDA margin within our long-term range at 25.4%. Cost of financing was $352 million pesos in the second quarter compared to $356 million pesos in the same period last year. Net interest expense was slightly higher at $373 million pesos versus $319 million pesos last year. During the quarter we had a $21 million pesos foreign exchange gain which compares to a $37 million pesos loss last year.

Net income for the quarter was $1.9 billion pesos with earnings per share of $0.62. We maintain a very strong and healthy balance sheet. Cash position as of June 30 was $11 billion pesos. We have no debt maturing for the rest of the year and maturities for the coming years are comfortable. Net debt to EBITDA ratio is 1 and the EBITDA to net interest coverage is 10 times. Over the last 12 months we have repurchased close to 50 million shares, more than 1.5% of the shares outstanding, which brings the total payouts to shareholders to 7.5% including the cash dividend. Thank you.

As expected and mentioned in our prior calls, the first quarter trend continued during the second quarter and resulted in top line basically flat versus last year, albeit a quarterly record lower bottom line margin but improving sequentially and EBITDA well within our target range despite significant uncertainty, consumption deceleration, raw material cost increases, and very negative exchange rate. Once again, this reflects the strength and resiliency of Kimberly-Clark de México on the top line. We compared to a very strong second quarter of last year and we faced a challenging environment with leading indicators signaling a slowdown of the economy and private consumption. A key indicator for us is that volume growth in some of our most important categories is muted and even in higher growth ones it spins lower. In addition, we continue to see clients aggressively manage their inventory given the economic conditions and uncertainty.

Plus, and this is very important, we intentionally reduced our support during the heavy summer promotional season. This strategic decision had an important negative effect on our volumes, but it’s intended to protect the value of our brands as well as reduce the negative pricing effects. It means that both consumers and clients did not stock up on our products, which should translate into healthier volumes and prices during the second half of the year. This, together with our accelerated innovation plan—and I’ll have more on that in a moment—increased investment behind our brands and execution behind the opportunities we’ve identified should translate in growth accelerating in the coming quarters. With respect to cost, the higher exchange rate plus the fact that the anticipated relief in coal prices did not materialize, particularly softwood pulp and fluff which were at record levels, had a meaningful impact.

Given soft demand from China, we are finally seeing prices come down but slowly. Going forward, we expect dollar denominated costs on tissue raw materials, that is pulp and recycled fibers, to have a more modest impact. We expect a mixed picture in personal care, higher fluff but lower resins and superabsorbent materials. Having said that, it’s clear that the lack of certainty and many different moving parts could change the outlook. Accordingly, we’ve carried out selective price increases, have put in place actions to support a richer mix, and are well on our way to achieving record savings for the year. Now let me turn to innovation and provide an update on our launch of the pet business. During 2025 we will introduce product improvements in every category in which we participate.

So far we’ve introduced important innovations in the diaper, wipes, and incontinence categories among others, and in the coming quarters we’ll continue to strengthen our offerings to consumers in bathroom tissue, incontinence pads, and feminine care. We’ll be in a position to share more details on this in future calls. We also continue to make progress to bring to market technologies and products that will increase consumer preference for our brands in the coming years. Finally, as we’ve discussed with you, in the medium term we expect to accelerate our growth rate by achieving double-digit growth rates in categories with higher growth potential like wipes, kitchen towels, facial tissue, and wipers among others, as well as through adjacencies and entry into new categories.

With respect to adjacencies, the recent integration of 4e Global into the KCM operation is creating opportunities to strengthen our position and capabilities in the soap and toiletries categories as well as to participate in shampoos and other liquid-based product categories. As we move ahead with our plans, we expect sales to accelerate in this category during the second half of the year and particularly during 2026 and 2027 as we bring our pipeline of innovations to market. When it comes to our entry into the pet food business, we are in the process of gaining distribution behind our brands and have started the commercial and marketing efforts to support them. We have received excellent feedback from consumers and will embark on an aggressive sampling program to get more consumers to try our superior products and start to position and grow our brands.

We’re in the first mile of a marathon. We are excited with the consumer’s very positive reaction to our products. We’ll keep you updated on our products. With that, let’s turn to your questions.

Conference Coordinator: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, press star one to ask a question. We’ll take our first question from Alejandro Fuch with Eco. Please go ahead.

Thank you. Good morning. Thank you for the questions. I have just one brief one on the top line. Maybe, Pablo, wanted to see if you can elaborate a little bit more into the volume pressure. I know you mentioned some macro slowdown and consumption slowdown that we have seen across the board in Mexico, but wanted to see if maybe you can also talk if you think this is also maybe competition. What are some of your competitors doing? Also, maybe you said that second half should be a little bit better. We have more growth, but you continue to see the slowdown today and comps are a little more difficult for Kimberly-Clark de México in the second half. Maybe what would be the drivers of growth in the second half of the year? Thank you.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thanks for the question, Alejandro. Participating in the call? Yes. As you know, the Mexican private consumption and the economy as a whole has continued to slow down, and we are certainly feeling it in our categories. As I mentioned, it’s a key indicator for us that volume growth in our biggest categories is muted. We are seeing, for example, in diapers and bathroom tissue, growth is flat over last year. In the higher growth categories, we are seeing them growing at a higher clip, but still not at the rate they were doing. There is no doubt that the consumer is stretched and they’re trying to make ends meet and really trying to. We continue to see that. The thing is that that’s the sellout in our categories, but then you have the sell-in.

We are seeing a big difference between the sell-in and the sellout because we see our clients being very, very aggressive in the way they’re managing their inventories. Those two things are certainly having an important impact in volumes overall in sellouts, but then even a higher impact in our case in sell-in as clients work through their inventories. Given all of the uncertainty now going forward, we currently see no big support for the domestic consumption to increase significantly in the coming quarters. The reason why we’re a little bit more bullish on our end is because, one, as I mentioned, we did not participate as aggressively as we have done in the past in the summer promotional season. We did that to protect the pricing and the value of our brands.

What that means then going forward is that you don’t have clients as inventoried as they have been in past years and consumers inventoried in our product as they were in past years. I’m mentioning clients, not just clients, because what happened in past years and still continues to do so with these promotions is that those who do the promotions bring in a lot of product to their inventories before they go ahead and put the promotion in place, and then they sell that product both to consumers but also to other clients. They do sell this product to the wholesale channel. What would end up happening in past years is that during the third quarter, many clients were inventoried and many consumers were inventoried, plus the price would devalue.

Now that we didn’t do that, we’re expecting going forward that our inventories are a little bit healthier out there both with clients and consumers, and we expect that to translate into volumes increasing going forward. That’s one, and certainly the other is all of our push we have behind our innovations. We are continuing to work on a multi-tiered, multi-channel strategy that you know very, very well, and we will be strengthening that strategy so that we strengthen our differentiation at every level. We are adjusting counts, presentations, and the corresponding prices to make our products even more accessible to, as I said, stretched consumers. Also, we are fine-tuning and strengthening our private label strategy where it makes business sense. Again, we think we’re in a healthier position, plus the actions we’re taking in innovation and strategy wise.

We believe over the coming quarters it won’t be quick, but over the coming quarters we should, we expect our volumes to start to pick up.

Thank you very much, and have a great weekend.

Thank you, Alfonso.

Conference Coordinator: Our next question comes from Bob Ford with Bank of America. Your line is open.

Hey, thank you so much and good morning everybody. Pablo, are your exports to the U.S. impacted by the Trump tariffs or are they shielded by the USMCA?

Pablo González Guajardo, CEO, Kimberly-Clark de México: Shielded by the USMCA bomb.

Fantastic. I was just curious, how are the tariffs on China kind of impacting Kimberly-Clark de México sourcing out of China? How are you thinking about the export opportunity into the U.S.?

Yeah, thanks for the question, Bob. Look, there’s of course a lot of uncertainty as to where all this will end, but there’s no doubt that there’s going to be higher tariffs on China and many other countries. We believe that, relatively speaking, Mexico will be in a much better position versus all those countries to continue to integrate further with the U.S. Our partner is looking at this very, very closely, and we’re having very productive conversations with them to understand where the opportunities are so that we can increase our exports of finished products to them. I think we’ll see this certainly come to bear in the fourth quarter and through next year. It’s not only with Kimberly-Clark de México, we’re doing this with quite a few other players that they believe they’re going to be impacted with what’s happening.

We’re certainly trying to take advantage of that since we believe we’re not only well positioned right now, but as I say, we’re confident we’ll continue to be better positioned than the rest, so we’re exploring all the opportunities. As you know, it takes a little bit of time, but we do believe that many of this will bear fruit in the coming quarters and certainly into 2026. It’s a good opportunity for us.

It’s great to hear. With respect to the discipline that you showed in the summer promotional campaigns, did competition show similar discipline, or was it the classic? It’s almost like a game theory problem, right? I’m just curious what you’re seeing in terms of the competitive environment.

I think competitors pretty much approached the summer promotional season as they’ve done in the past. When the promotions did go into effect for those four or five days when they do them, we were certainly at a big disadvantage. Again, we believe that for the long run, this is the right thing to do. It hurt us during the quarter, but it positioned us very, very well going forward. We’ll continue to be very, very diligent in how we approach this to protect the value of our brands and to bring the best value possible to consumers and clients.

That makes sense. One last question, if I could, please. That is, you touched on entering the shampoo category. I was just curious if you could, you know, do you plan to extend SKUs into the shampoo category? Are you thinking about a different branding campaign? I’m just kind of trying to understand the addressable market, the positioning of the product, and maybe the margin profile.

Sure. We’ll be able to share more in the coming quarters, Bob, because we’re going through the whole analysis. What I can tell you right now is that we already participate in the shampoo category, particularly when it comes to certainly toddlers and kids, but also in adults. We have some specific brands that we sell through different clients, and they sell pretty well. We’re just taking a look at the market. We’ll take a look at the participants and figure out what would be our best strategy to participate in that market so that we can do it in a way that we can grow, but grow profitably. Otherwise, it’s something that we have no interest in. We’ve made inroads so far with a couple of clients, and we’re finding our way.

I don’t think you’ll see—let me just put it this way—I don’t think you’ll see a national brand and a big, big push behind a national brand. It’s really niche and the way we’re playing with certain clients, with certain brands that they’re supporting very aggressively. We’ll be able to share more on this and some other very interesting and important initiatives for us in the coming quarters.

Thank you so much.

Thank you, Bob Ford.

Conference Coordinator: Our next question comes from Antonio Hernandez with 4e Global. Please go ahead.

Hi, good morning. Thanks for taking a question. Could you provide a little bit more light on how was faith trending during the quarter? I mean, is it a soft start and then you get stronger or the fifth other one, and maybe you could provide more light also in terms of concern and away from home within this perspective?

Pablo González Guajardo, CEO, Kimberly-Clark de México: Sure. Antonio, to make sure I got your question because you didn’t come out very clear, you’re asking about during the quarter, how we progressed, right.

Exactly how you’re seeing this start of the first quarter.

Okay. I’m going to say that it was, again, given economic conditions, we didn’t see in our case very big differences April, May, or June. Again, our competitors who were more aggressive during the particular June promotional season probably saw a difference. In our case, we managed it differently. It was pretty consistent, and we’re seeing the same thing with the start of July. Unfortunately, at this point, we see no big catalysts for domestic consumption to really accelerate. Hopefully, that changes in the near term, but there haven’t been any catalysts for that to change. It’s really more about us putting a strategy that allows us to get closer to the consumer, to our clients, and gaining some share so that we can get growth in the second half of the year.

Now, when it comes to professional, we saw an important decrease in sales in our professional business this quarter, and it was mainly driven by volume. Our price mix was slightly positive, and it really has to do with the same economic conditions that we’re seeing. As we talk to our distributors and we talk to our end clients, particularly outside of Mexico City, both hotels, restaurants, et cetera, they’re seeing a sharp, sharp slowdown versus last year. I mean, double slowdowns when it comes to tourism in Cancun and many other places, and it’s just much, much lower than it was. When you put that together with the distribution system we have for that business, which is through distributors, and distributors in this case tend to have quite a bit more days of inventory than, say, in the consumer product side, they needed to bring down those inventories.

It’s a combination of a slower economy and our distributors needing to bring down inventories because of the uncertainty and a slower economy. We’ll see if that picks up here in the coming quarters. Everyone I talked to so far says that Mexico particularly seems to be doing well, but outside of Mexico City, things seem to be quite a bit slower when it comes to services, and that’s certainly hitting us on that business. Doing the same as we’re doing in consumer products, making sure we have the right products for this moment in time, that we’re working with the distributors to get those products to market, and that we’re talking to clients to make sure we understand their needs and we can get those products to them as quickly as we can. Certainly, there’s no market at this point.

Thanks. Appreciate the call. Have a nice weekend.

Thank you.

I’m talking to you too.

Conference Coordinator: Our next question comes from Ryan Lavick with Barclays. Your line is open.

Hey, this is Ryan on for Ben. Thanks for taking my question. Focusing on consumer behavior a little bit here, are you guys seeing any trade down amid the price increases you took during the quarter and lower remittances coming into the country as well? Going on that a little bit with the value proposition for Kimberly-Clark de México, what do you think in the third quarter, fourth quarter, as you talk about potential volume increases, is going to have customers choosing your products over competitors, especially with the larger price gaps now?

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thanks, Ryan. Thanks for the question. A very important one. Yeah, no doubt we are in the market. We’re no doubt seeing consumers and I’m being very cautious saying in the market because in our case we have a richer mix because we’ve supported many of our upper tier products and they performed very, very well. You’ve got a dichotomy, a market where consumers that have a little bit more to spend continue to do so. The majority of the population is stretched and they’re certainly trending or trading down to lower priced products and lower count products. What are we doing about it? We have been doing it and we have very important plans in the second half of the year to strengthen this.

Again, we’re working on our multi tier strategy, making sure that we have the right prices for every tier and the right product for every tier. As you know, we have products in the economy tier, also in value and premium. Many or most of the times when people are trading down, they trade down from one of our brands in value to one of our brands in economy because we did in value, economy and premium. We need to continue to strengthen that proposition because there’s certainly more competition out there. We are strengthening that proposition and we’re seeing in many instances some very good results.

The other thing we’re doing, and this is not just for the economy products, but for all of our portfolio, is we’re making sure at this moment in time we have the right counts, the right presentations and the right prices out there to make sure our products, again notwithstanding the tier, are even more accessible to consumers. We’re putting in place quite a few things in the coming quarters to that respect, and finally, as I said, we’re fine tuning and strengthening our private label strategy where it makes business sense. We’ve always said that we analyze this and wherever we see an opportunity that we believe makes sense, we pursue it. We continue to fine tune that strategy. You’ll probably see us be more aggressive on it in the coming quarters.

I would say those are the key areas behind our push for higher growth in the coming quarters. It won’t be fast because it’s low out there, but we continue to believe that we’re well positioned and with the actions that I’ve just described, we’ll be even better positioned to take advantage of or to serve our clients and our consumers. Certainly in the coming quarters, I mean, to 2026 be in a much, much better place.

That’s perfect. Appreciate it. Yes, thank you. Thank you.

Conference Coordinator: Our next question comes from Roiland Mendez with JP Morgan. Your line is open.

Hola, Pablo.

Thank you for taking my question, Pablo. Just want to make sure I understand because you mentioned that second half should see better volumes and even growing volumes. When I hear more of your comments and your deeper dive into the dynamics and specific categories, the only lever that I can hear from your speech is the fact that you are probably with less inventory at the different channels that will allow for the sellout. Sorry for the selling to be more, say, more robust into the second half. Not really that the consumer is actually willing to buy more. In that sense, second half outlook on top line, is it really a game, not a game changer, but an inflection point? If it is the case, what should we expect for margins? There you do have some levers, right? Better FX. You mentioned about input costs coming down.

In that sense, with the combination of top line plus cost, do you feel more comfortable to end up the year in the higher range of the guidance? Thank you so much.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thanks. Thanks for the question. Let’s see if I can provide a little bit more clarity. Let me put it this way. When we think of top line in the short term, we’ve got a couple of headwinds. One is, as we’ve mentioned, the economic slowdown. Two, the inventory reduction we’re seeing from our clients, and we’re still experiencing that. We believe we’re in a better position, so we’ll be stealthier certainly through this than many other competitors. Those two things are headwinds. Now, when we think of tailwinds, as you mentioned, I think the strategy we put in place protected volumes, protected price, very importantly, prices also. That should certainly help. As I was just mentioning to Ryan, very importantly, the adjustments we’re making in the second half to our portfolio and strategies, which we are confident will be able to aid our volume growth.

Putting those strategies and portfolio in place doesn’t happen overnight. July might be a little bit slower, but we’re certain that by the end of this quarter we’ll see a very different picture. Certainly by fourth quarter, some of these things we’ve done already and they’re showing great, great progress. We are confident that many of the other adjustments we’re making will also provide us with an advantage and bring volume to our site. Might still be a little slower start in the third quarter, but certainly picking up throughout. We believe we’ll be in a much better position in fourth quarter, certainly in 2026. That’s on the top line and I hope that provides a little bit more clarity. On the bottom line, which you mentioned, also some headwinds and some tailwinds. Let me go through that very quickly.

On the headwind side, a couple raw materials still are pressuring our cost, but we believe the impact will be more moderate than it’s been this past quarter, which has been pretty aggressive between the increase in prices, for example, in pulp and fluff, plus the exchange rate. Going forward, that pulp side will change. As we said, recycled fibers might provide a little bit of a more moderate impact, fluff will continue to impact, but super absorbent materials, resins, will be a positive. We’re starting to see a different picture of raw materials that have a more moderate impact, those that are still higher and some that are coming down. That’s one headwind. The other one is that, of course, we’ve got some inventories in our balance sheet, given the prices that we’ve seen in the past couple of quarters.

Our inventories are higher, not in volume, just in price, because of how prices went up. We have to go through that inventory, but we’ll do that here in the coming month, month and a half, and get through that. Those are the headwinds and then the tailwinds. Very important. As I mentioned, some raw materials have certainly turned around. The exchange rate will be in a much, much better place during the second half of the year. Our savings plan continues to bring about great savings. We’re working hard to bring even more in this year and working into 2026 and 2027 already. Headwinds and tailwinds, in both cases, top line and bottom line. As we move through the second half of the year, we’re very, very confident that the tailwinds will be much stronger than the headwinds and our results will continue to improve. Hope that provides clarity.

Perfect.

Thinking about the margin guidance ending in the lower end or in the higher end or in the middle, as you see it today, where do you.

Feel most profitable on margins?

It’s uncertain with all of the things happening. You’ve seen that we’ve been able, even with all of the pressure, we’ve been able to keep our margins strong. If this tailwind, particularly towards the end of the year and into 2026, goes our way, our margins should continue to improve.

Excellent. Very helpful. Gracias, Pablo.

Gracias, Foyers.

Conference Coordinator: Our next question comes from Juan Guzman with Scotiabank. Your line is open.

Hi, good morning. Pablo, Javier Salvador, and all the team there, thanks for taking four questions and congrats on the results. Pick one here. As a follow-up to your previous answer regarding expenses, we have seen some improvements in operating leverage along the year, although SG&A as a percentage of sales is still a bit above your stock levels. My question here is how sustainable do you see these gains and how much room do you see for further improvements over the next quarters? Aside from the positive effect of a higher top line growth in the future, what measures are you taking on this front?

Thank you very much.

Hello Juan. I’ll take the first one in terms of SG&A.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Yes.

As you noticed, this quarter and the first quarter of the year, we made significant efforts to curtail some of our expenses due to the situation we’re facing. Some of these, and for the most part, we will continue to have going forward, although we will also ramp up our investment behind the brand. I would probably say that going forward, we will pretty much be in line with what we’ve seen on average in the past few quarters. One opportunity and one area with reduced expenses, and this one will continue to provide benefits going forward. Again, it’s going to take time, is distribution expenses.

That’s Juan on what’s happened and what we believe where we’ll be in the near term, longer term going forward. We were living in a very different environment, and even though we’ve always been a very lean and efficient company, we’re working very hard and have exciting plans to make sure we stay as lean and efficient as possible. Hopefully, in the future, that will mean that even in the current scenario we can improve upon it. Because again, it’s a different competitive environment and a different economic environment. That’s the way we see it, and we’re approaching it in the sense that we need to continue to evolve with it and transform ourselves and make sure we are the most efficient and leanest company out there. We’ve got plans for that to continue to be the case going forward.

Got it. That’s pretty clear.

Thank you very much.

Thank you.

Conference Coordinator: As a reminder to ask a question that is DAR1, we’ll take our next question from Renata Cabral with Fifth Third Bank. Please go ahead. Hi. Hi everyone. Hi, Pablo.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Javier.

Conference Coordinator: Thank you so much for taking my question. My question is a follow-up regarding SG&A. We know that other industries are more labor intensive, but there’s the discussion of gradual reduction of labor hours in discussions in Mexico. Just to understand, how do you see this impact in the company, if there’s any ongoing simulator or initiative to mitigate this impact if the law passes in the future. Thank you.

Hello, Renata. The analysis that we’ve done so far point to two things. Number one, any impact would be not on SG&A in our case, but on cost of goods sold because these labor changes would affect union and workforce. There’s some impacts, but I probably say two things there. Again, this is what we’ve identified so far. Number one, the size of the impact is not that significant. If you recall, labor, we present about 8% of our cost of goods sold. Out of that, a significant proportion comes from profit sharing and that would not be affected. The other part, which is directly related to salaries, would be impacted in a proportion, but again, it’s only on 5% of our cost of goods sold.

Number two, having identified these risks, we have put in place several teams, several initiatives to see where we can offset these increases, where we can add automation, improve efficiencies, so that over the long term it doesn’t have a significant effect on our cost.

Thank you so much for the call. Very helpful.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thanks, Renee.

Conference Coordinator: It appears we have no further questions at this time. I’ll turn the program back to the speaker for any additional or closing remarks.

Pablo González Guajardo, CEO, Kimberly-Clark de México: Thank you, Raiza. Thanks for your help, and thank you, everybody, for participating in the call. Hope you have a wonderful summer. We’re ready to take your call if you have any further questions, and as you know, always happy to discuss further with any of you. Thanks again. Talk to you soon.

Conference Coordinator: This does conclude today’s program. Thank you for your participation, and you may disconnect at any time.

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