Kimberly-Clark de Mexico Stock

Hello, and welcome, everyone, joining today's Kimberly-Clark de México Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to CEO, Pablo Gonzalez.

Thank you so much. Good morning, everyone. I hope you're all doing well, and thanks for participating in our call.

As usual, we will provide some brief remarks, and then we'll open it up for questions. We had another strong quarter and a good first half of the year with record revenue behind the strong performance in our consumer products businesses, continued double-digit increases in gross profit, operating profit and EBITDA and EBITDA margin at the top end of our range.

Our strategies and actions are having the intended impact, spearheaded by strong commercial and operating execution, and we continue to make progress on our KCM plus innovation, growth and transformation strategy. More on that after Xavier takes you through our second quarter results. Xavier?

Thank you. Good morning, everyone. During the quarter, our sales were MXN 14.4 billion, a 2.7% increase versus the second quarter of 2025 and an all-time high. Total volume was up 3.1%, driven by Consumer Products, while price/mix was flat.

Net sales were led by Consumer Products, which grew 5.2% with a 4% volume increase and 1.2% price and mix growth, while Away from Home decreased 5.1%. Exports were down 11.1%.

Cost of goods sold decreased 3%. Our cost reduction program once again had very good results and yielded approximately MXN 450 million of savings during the quarter. These savings are mainly at the cost of goods sold level.

They were generated through a combination of global fiber contracting initiatives, changes in sourcing and the use of alternative fibers, product redesigns and the introduction of new raw materials in nonwoven fabrics, diaper geometry redesigns to improve material efficiency and logistics and distribution efficiencies across our network.

These initiatives reflect ongoing actions across procurement, product design, manufacturing and logistics. In addition to these actions, compared to last year, fibers and fluff were favorable, while superabsorbent materials and resins compared negatively.

The FX was lower, averaging around 11% less than last year. Gross profit increased 11.9% and margin was 41.6% for the quarter. SG&A expenses were 11.5% higher year-over-year and as a percentage of sales were up 140 basis points.

Distribution expenses were higher, while we continue to invest behind our brands and work to improve our footprint and streamline logistics operations. Operating profit increased 12.2% and operating margin was 23.7%, up 50 basis points sequentially.

We generated MXN 3.9 billion of EBITDA, a 9.6% increase year-over-year with EBITDA margin at 27.1%, above the long-term range, representing 40 basis points sequential improvement. Cost of financing was MXN 470 million in the second quarter compared to MXN 352 million in the same period last year.

Net interest expense was higher since we have more debt. During the quarter, we had a MXN 50 million FX gain compared to a MXN 20 million gain last year. Net income for the quarter was MXN 2 billion, a 9% increase.

Earnings per share were [ MXN 0.68 ], a 9.7% increase. We maintain a very strong and healthy balance sheet. Our total cash position as of June 30 was MXN 19.6 billion. Our net debt-to-EBITDA ratio was 0.9x with EBITDA to net interest coverage of 9x. Thank you.

As mentioned, we had a strong first half of the year despite still subdued economic growth and private consumption. As we move into the second half, we expect consumer products businesses to continue to lead the way, the Away from Home business to grow during the second half of the year and parent roll sales will be lower due to more tissue required for consumer product sales, but becoming less of a drag as the year goes on.

All in all, we expect stronger revenue growth going forward. With respect to raw material costs, fundamentals support lower dollar prices versus last year. But given the current geopolitical tensions, all derivatives will be higher both sequentially and versus last year. We expect prices will return to underlying market fundamentals by end of the year. In the meantime, we will accelerate our price realization efforts and stay focused on operational efficiencies and ensuring another good year in our cost reduction efforts.

Of greater importance, we continue to make good progress on our KCM plus strategies.

Our core businesses are performing well, and our diamond categories are accelerating growth behind consumer-centric, relevant and differentiated innovation together with greater engagement and improved commercial execution. Further, we continue to make inroads in private label and continue to work with our strategic partner to strengthen the North American supply chain. When it comes to new areas of growth, we continue to make progress on pet food and are actively analyzing the Kenvue opportunity. All in all, our KCM plus initiatives focused on accelerating growth are going well.

Equally important, our efforts to develop our skill set, better utilize data, work closely with our retail partners and transform our end-to-end cost structure are gaining momentum. As we've mentioned before, effectively deploying and efficiently utilizing the most advanced technology solutions is the fundamental layer to support and drive all these efforts and time is of the essence. We hope these comments provide a good picture of where we stand. With that, let me open the call for questions.

[Operator Instructions] We'll take our first question from Alejandro Fuchs with Itau.

Congratulations on the results. I have 2 quick ones, if I may. The first one, Pablo, I wanted to see if you can elaborate a little bit what are the main differences driving growth for the consumer segment relative to the Away from Home segment where we have seen a couple of quarters where there's a big difference in terms of growth in top line.

So maybe if you can elaborate a little bit why is there such a big difference? And I know that you said you expect better growth for Away from Home going forward. What's going to change for the second half? And maybe the last one would be regarding the Kenvue deal, if you have any updates in terms of timing of the conversations? Should we expect maybe more color towards the third quarter or the fourth quarter?

Thanks, Alejandro. Thanks for the questions, and both very important. Look, as you mentioned, we've had very good quarters on the consumer side, and that's driven by strong innovation behind our brands and relatively strong market shares, plus making inroads in certain opportunities that we've identified.

So doing well both in our core categories and accelerating our growth in our diamond category. So overall, I would say consumer products is going well, particularly when it comes to volume. So we're pretty happy with that performance, and we're working hard to make sure that continues. When it comes to Away from Home, I mean, we've been talking a little bit about, one, distributors being a little bit more careful given the economic scenario.

And now what we also saw happening is that they became a little bit more aggressive bending on the outcome on consumption given the World Cup experience. And what we actually saw is that those expectations did not materialize. And as a result, really competition to drive volumes intensified and that negatively impacted pricing.

So we did see in Away from Home sequentially volume improvements, but pricing was affected because of this competition, again, to get more volume into the market. That may continue here in at least July, but we expect that to subside as the year progresses and have inventories and the business return to more normal levels.

It will still probably be lower growth rates because, again, the economic conditions are not conducive for our distributors to supply more products to restaurants, to hotels, et cetera.

But we do expect it to come back to growth end of this quarter and certainly in the fourth quarter of the year. I hope that helps when it comes to consumer versus Away from Home. When it comes to the Kenvue acquisition, we are very, very actively working on it with our partner. And I would think that during this third quarter, we will have more information on that front.

Our next question comes from Bob Ford with Bank of America.

Pablo, your export business was down year-on-year, but up quarter-on-quarter, right? And you mentioned master rolls being down. How should we think about the mix? And how are you thinking about sales over the balance of the year? And then I was hoping, given the outlook for some of the inputs over the balance of the year, how are you thinking about industry pricing dynamics, particularly during the summer selling season, but from this position of strength with respect to your shares right now?

Thanks, Bob. Thanks for the questions. First, on the export business, yes, you're right. Our export to finished product was down versus last year, but it was up sequentially.

Our export or parent rolls was also down versus last year, but was also up sequentially. And this has to do, particularly on the export to finished product side with a couple of things. One, the exchange rate differential, of course, versus last year; two, that we were comparing to a record quarter in export finished product sales last year. Third quarter was also pretty strong and a slightly lower volume demand from our partner.

So just it was really timing in the second quarter, and there will be a little bit of that in the third quarter. But as you know, overall, we've been working with our partners to position ourselves to strengthen the North American supply chain, and we still believe that's the case, and we're finding good opportunities.

And so over a longer period of time and certainly for next year, we're seeing very, very good -- our expectation is for a strong growth certainly in that business. When it comes to parent rolls, again, it depends on how much we consume internally, and we're consuming more internally because of how strong our performance has been in consumer products.

But we're also finding ways to produce more. So hopefully, we'll be able to find here a combination where we can both use more internally, but also supply more externally and at least have that be less of a drag as we move forward. When it comes to the cost side, again, hard to say where this -- how long this will last. I mean we expected this to be a very short time and with relatively lower impact, but it's dragged on for a little longer, I think that pretty much everyone expected.

It didn't get as bad as also some people expected it could get, but it has certainly had an impact. So we will see some of that impact in cost here in the third quarter. And hopefully, as we mentioned, if you go back to fundamentals, those support lower dollar prices in our raw materials. So hopefully, we get back to that by the end of the year.

Having said that, having said that we will see more pressure on this quarter, we still expect to be within the range of our EBITDA margin target for the quarter, notwithstanding those price cost pressures. And again, hopefully, even improving in the fourth quarter as we move along.

Now given that this is happening, we will continue to monitor any opportunity for price realization. It's always tough during the promotional summer season, and this one has been particularly aggressive again, as consumption has been subdued. So some of the retailers and some of our competitors have been a little bit more aggressive. So it's really hard at this time to really reflect pricing, but we also expect that to start to die down as this July passes and certainly into August and definitely through September. So we'll continue to look for opportunities on price realization to be able to absorb some of these cost increases. But again, even if we're not able to do that, we are expecting to be able to deliver EBITDA margins within our target range.

Understood. And if I could just follow up, Pablo, you touched on private label in your comments. And I was curious if you're seeing a downtrend within your own price tiers? And how are you thinking about participating in private label and the equilibrium with the branded side of the business?

Sure. That's a great question, Bob. Yes, I mean, what we're seeing, not different from other economies is we're seeing what many are calling the K-shape, right? So consumers who are buying premium products continue to do so.

But we do see some consumers on the value segment trending down to economy segment and in some cases, trending down to private label offerings, particularly when it comes to hard discounters and some of the more economy-driven formats, for example, [indiscernible] et cetera, where there's also a big push to help consumers and provide these products at a lower cost.

So certainly, that dynamic is happening. As you know, our strategy has always been to have this multi-tier and multi-brand offerings with superior products in every tier to all of the private label offerings out there. And that will continue to be the norm, and that will continue to be our strategy, and we will bring innovation behind that very aggressively in the coming quarters and certainly into next year. We've got a really, really nice pipeline that we put into place this year, and we love how it looks going forward.

So that will certainly help. But we've also said that we want to be more strategic about participating in private label. And given that it's a trend that continues and certainly something that retailers want to push forth, we see an opportunity for growth there if we participate.

So we're making inroads. We're working with quite a few of them and starting to supply some of their products, gaining that traction, momentum, confidence or trust with them to build that business. And what we're going to have really is have our private label where we can supply it, compete with our brands for consumers' preference.

And again, on the one hand, multitier and continued innovation to stay a step ahead and on the other, providing very good products for private label to be able to meet the demand of both our customers and our clients. So a dual strategy, which started to pay off, but a lot more to do there, a lot of room for improvement and growth.

Our next question comes from Antonio Hernandez with Actinver.

Congrats on your results. Well, actually following up on the last answer that you provided. Can you share more light on how much is private label as a share of sales? How much has it been growing within Kimberly-Clark? And maybe how much of a potential do you see there? And also within innovation, how much of that innovation is addressing both the trade-off and the trade down? I mean the K-shift economy?

Sure, Antonio. I mean innovation, private label still a small business for us. We expect that maybe this year, it will be around MXN 800 million. That's about double what we did last year.

But again, with expectations that it can continue to grow at a very interesting clip in the next couple of years as we gain traction behind our initiatives. So a lot of focus there to make that happen. In terms of innovation, I mean, really, the strong performance behind consumer products, diapers, bathroom tissue, feminine care incontinence.

So both on our core categories and some of our diamond categories is supported by strong innovation. We've been able to, in every category, bring new products to market, of course, together with a good commercial execution. So from new offerings in Cottonelle in bathroom tissue to new offerings in pretty much every tier in our diaper business, and we will be introducing more innovations in the premium side of the business this year to improvements in the value and economy tier in the wipes business and a new product line in feminine care, a new product line and incontinence.

So I would say that it's broad-based and that is in a very important way, why we've been able to continue to grow at a very good clip in consumer products despite the consumer environment.

We will move next with Reid Monahan with Barclays.

So I was wondering with quarterly savings of -- another quarter with savings around MXN 450 million and EBITDA margins holding above the long-term target range. Sort of how much of the current savings are run rate -- savings run rate would you consider structural versus timing related? And as we look towards 2027, how sustainable are these current margin levels? And what do you expect the raw material and FX conditions as that plays out?

The way we usually -- not usually, the way we account for the cost savings is we only include cost savings that are for the most part for the long term.

These are things that we can add on 1 year and go forward. So they're more structural than conjunctural. That was your question, right?

Yes. Yes. And then also sort of how you see, I guess, material costs play out over the course of the year?

Yes. I mean let me just touch a little bit on what Xavier said in terms of this being structural. And we mentioned in our comments a couple of the things, but maybe that's useful because, for example, when we're generating savings through global fiber contracting initiatives and changing sourcing in different raw materials.

So of course, that's structural. I mean we're out there, I'm going to say, around the world looking for sourcing the best prices in our materials. And when we find that it doesn't end there.

We continue to look for the best sourcing possible, and we've been able to source materials from different parts of the world at preferred costs. And that's one example of the things we continuously do. So that's really structural because it's behind our culture of just being out there and making sure we find the best opportunities. And the same can be said for product redesigns and some other efficiencies.

So again, always looking to structurally improve our cost structure and our efficiencies. Going forward, as we say, I mean, hard to tell if it was just by fundamentals, we should be seeing lower dollar prices in most of our raw materials because there's quite a bit more -- in many of them, quite a bit more supply than demand and in many areas of the world, subdued domestic consumption.

But that's being interrupted because of the current geopolitical tensions. How long that lasts it's anyone's guess. So right now, we will see an impact. But eventually, we believe we will see those raw materials come back to fundamentals, and that will support lower costs.

And certainly, that, together with our efficiencies and our cost efforts help us continue to deliver good margins and certainly within our target range. This was the 13th consecutive quarter within or above our range, and we certainly expect that to continue as we move into the rest of the year and 2027.

Our next question comes from Guilherme Mendes with JPMorgan.

Another question on private label. Pablo, how do you define the point where more private label starts hurting the branded business? I don't know if it's through the price gaps, the shelf space or even the consumer trade down but away from your portfolio? And how do you decide when to lean into private label to keep your plant utilization high and maybe even contain competition versus stepping back to protect your branded mix? That's my first question.

And the second, this extra gain on margins ahead of the guidance range, given the overall weak consumer backdrop that we're seeing, how much of this extra gain do you think you should need to invest into pricing or marketing into the second quarter? Or this is something that you think can go throughout the year and really go above the guidance for the full year?

Let me start by this second one for you, and thanks for the question. Again, as we said, on the cost side, the third quarter will certainly be more challenging sequentially and to some degree versus last year because of everything that we mentioned so far, particularly when it comes to all derivatives.

And I mean, eventually, we'll see that come down, but certainly, the third quarter will be a little bit more challenging. Having said that, we do expect to be able to deliver within our target range and as things come back to the fundamentals, we will see better costs, and that should be helpful going forward.

So on pricing, that's on the cost side. And on pricing, again, we'll continue to look for opportunities for price realization, but it is clear that as we're in the summer promotional season and the economies are growing much, there's quite a bit of pricing going into the market. And so it won't be that easy to be able to achieve higher pricing within the quarter.

But still, we think we'll be able to deliver. Now we won't be able to surpass what we did in the second quarter, but we should be able to deliver within our target range and improve on that for the fourth quarter, assuming costs get on a better footing and the promotional season and pricing aggressiveness starts to die down.

And you know that's usually what happens in the third quarter every single year. It's not a surprise. It's not uncommon. It's just that now we have the cost pressure also on top of that. When it comes to private label, again, and leaning into it, it's a combination of all of the things you've mentioned, right? There's a trend given that the economy has not really grown too much over the past decade and inflation has been higher, consumers are stretched.

And so it's become more of a trend that they're really trying to look for offerings out there where they can make their money last longer and be worth more. So it is a trend. We expect that to continue because we see no big catalysts for the economy to improve. So we expect the consumer to continue to be stretched.

So given that it's a trend, we want to be make sure we participate. But at the same time, we will compete as we've always done with our brands through innovation and commercial execution to be able to provide offerings at every tier in the market.

So it will be a dynamic that will unfold here for the coming years, and we want to make sure we participate in both, and we want to make sure we're successful in both and that, that helps us drive revenue growth for the company.

We will move next with Nicolas Rodrigues with Citi.

Regarding consumer products, which delivered like 5% of growth, could you provide more color on the categories and commercial [indiscernible] it is driving this performance and how you see the growth opportunity going forward, please?

Sure, Nicolas. Thanks for the question. I mean when it comes to consumer products, we see our core categories, that's bathroom tissue, diapers, napkins, our biggest categories with strong performances, let me call it low to mid-single digit.

And of course, those are the biggest categories. So those are, to some extent, driving the overall growth. And then our diamond categories, which are those with -- where we see greater opportunity because of penetration, distribution, greater usage, et cetera, like, for example, wipes, incontinence, feminine care, even our even flow bottles, et cetera, those we're seeing high single-digit growth.

So overall, a good mix of growth in all of our categories. And again, our shares being strong, and we expect that to continue going forward.

If I may, another -- this quarter, EBITDA margin was above your long-term range. Could you help us understand how do you think about the sustainability of this margin in the second half?

Sure. Again, the margin was higher because we had both strong performance from consumer products behind volume, but there was also a little bit of price and mix in there, plus we had a good cost during the quarter.

As I mentioned, costs during the third quarter, given geopolitical tensions will be higher, particularly when it comes to oil derivatives. So we expect within the quarter to deliver EBITDA margin within our target range, most likely not at this rate of 27% or 27.1% that we delivered this quarter, but within our target range.

And as the geopolitical tensions subside and raw material costs come back to fundamentals, then we will be able -- we expect to be able to improve on the performance of the third quarter. So it will be probably assuming that the cost fundamentals come back by the end of the year, it will be a mixed second half with probably the fourth quarter being stronger than the third.

But again, very important in all cases, our margins being within our target. And as we've said, this was the 13th consecutive quarter within or above our range, and we expect that to continue for the rest of the year and into 2027.

[Operator Instructions] We will move next with [ Juan Duman ] with Deutsche Bank.

Congrats on another solid quarter. Just a quick one here regarding the dynamics on SG&A expenses. I suspect there's some brand and top line reinvestments embedded there.

But also there might be some impact of higher freight or distribution expenses, I don't know. So I just want to be sure what you're expecting here? What's the breakdown if possible? And what are you seeing for the coming quarters?

The main things that you're seeing in as well, first, the main things that you're seeing in SG&A beyond what you already mentioned of investing behind the brands, which is key given all the things that we've talked about and which has been one of the drivers behind the performance of our consumer products.

The other thing that you see there, which is growing more than the top line is compensation-related expenses or provisions, particularly the profit sharing. As you know, we pay 10% of profit sharing directly, and we've been doing that for many years or many, many, many years. So that together with other compensation-related items add to the SG&A. I don't know if you Pablo have something else.

No, that's true. The other thing that we're seeing there, particularly when it comes to -- on the sales side is more use of the technology and information platforms of our customers.

And of course, they're trying to monetize that, and we're participating and we're making very, very good use of that information to figure out trends to figure out what's happening in the market and determine our strategies and commercial execution. So that is increasing year-over-year.

It will certainly won't look that way next year. But for this year, there's an important increase in that line item, and it will continue again, being an important increase versus last year. And then as we get into next year, we shouldn't see that line item increase as significantly as it has right now. But very important to have access to that information. And very importantly, we're using it very, very aggressively with our technology and even with artificial intelligence agents to be able to take advantage of all that knowledge that's in there.

We do have a follow-up from Bob Ford with Bank of America.

I was curious with respect to Kenvue, do you need any additional debt to close on Kenvue or do you expect to wrap up the transaction with existing resources? And then I was curious, how are you and KCC thinking about how Kenvue markets in Latin America outside of Mexico?

Thanks, Bob. Thanks for your question. I mean our discussion with Kimberly-Clark is strictly for the Kenvue Mexico business. And we're trying to figure out what's the best structure for the deal going forward.

And that's really where we stand. But assuming this goes forth, we absolutely would be able to deliver on it with our current structure, certainly adding some of Kenvue because, as you know, given the products that they sell, particularly they have a sales force that visits doctors, et cetera, that is a key item or key element of how they do business, a very important one.

So it would be a combination. But for the most part, with our structure, we would be able to just handle that incremental growth.

Understood. And from a financing perspective, again, no need for additional debt. You've got it on the balance sheet. You can close this pretty quickly, correct?

Yes. Financing, it shouldn't be an issue.

And at this time, there are no further questions in queue. I will now turn the meeting back to CEO, Pablo Gonzalez, for closing comments.

No, just thank you for participating in the call. I hope you all have a wonderful summer and looking forward to having our conversation after the third quarter. And just thanks again.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Hello, and welcome, everyone, joining today's Kimberly-Clark de México First Quarter 2026 Earnings Conference Call. [Operator Instructions]

Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the meeting over to CEO, Pablo Gonzalez. Please go ahead.

Thanks so much, Nicki. Good morning, everyone. I hope you're all doing well, and thanks for participating on our call. We had another strong quarter and a good start to the year with record revenue behind a strong performance in our Consumer Products businesses, double-digit increases in gross profit, operating profit, EBITDA and net income and EBITDA margin at the top end of our range. Our strategies and actions are having the intended impact, spearheaded by strong commercial and operating execution, and we continue to make progress on our KCM+ innovation, growth and transformation strategy. More on that after Xavier takes you through our first quarter results. Xavier?

Thank you. Good morning, everyone. During the quarter, our sales were MXN 14.3 billion, a 3.6% increase versus the first quarter of 2025 and an all-time high. Total volume was up 3.7%, driven by consumer products, while price/mix was flat. Net sales were boosted by consumer products, which grew 5.4% with a 3.7% volume increase and 1.7% price and mix growth, while away-from-home decreased 1.3%. Exports were down 6.8% due to lower hard rolled sales, while converted products grew 15.8%.

Sequentially, Consumer Products grew 1.4%, mainly volume driven, while away-from-home and exports grew 10.1% and 6.2%, respectively. Cost of goods sold decreased 1.1%. Our cost reduction program once again had very good results and yielded approximately MXN 450 million of savings during the quarter. These savings are mainly at the cost of goods sold level. They were generated through a combination of global fiber contracting initiatives, changes in sourcing and the use of alternative fibers, product redesigns and the introduction of new raw materials in nonwoven fabrics, diaper geometry redesigns to improve material efficiency and logistics and distribution efficiencies across our network. These initiatives reflect ongoing actions across procurement, product design, manufacturing and logistics.

In addition to these actions, compared to last year, virgin and recycled fibers, fluff, superabsorbent materials and resins compared favorably. The FX was also lower, averaging around 15% less than last year. Gross profit increased 11.1% for the quarter. SG&A expenses were 10.2% higher year-over-year and as a percentage of sales were up 100 basis points.

Distribution expenses were higher, while we continue to invest behind our brands and work to improve our footprint and streamline logistics operations. Operating profit increased 11.9% and operating margin was 23.2%. We generated MXN 3.8 billion of EBITDA, a 10.1% increase year-over-year with EBITDA margin at 26.7% at the upper part of our long-term range. Cost of financing was MXN 439 million in the first quarter compared to MXN 295 million in the same period last year. Net interest expense was higher since we earned less on our cash investments.

During the quarter, we had a MXN 9 million foreign exchange loss compared to a MXN 14 million gain last year. During the quarter, in early March, considering that maturities of recent years have been paid from cash, we issued Certificados Bursátiles for MXN 10 billion through 2 placements. The first placement was for MXN 8 billion with equal amortizations in years '10, '11 and '12, and the second placement was for MXN 2 billion with a 2.6-year term. This allowed us to benefit from favorable conditions and improve our debt maturity profile.

Net income for the quarter was MXN 2 billion, a 10.2% increase. Earnings per share were MXN 0.68, a 13.3% increase. We maintain a very strong and healthy balance sheet. Our total cash position as of March 31 was MXN 20.4 billion. Our net debt-to-EBITDA ratio was 0.9x with EBITDA to net interest coverage of 9x.

With that, I turn that to Pablo.Thank you.

As mentioned, we had a strong start to the year despite still subdued economic growth and private consumption. We expect growth to improve as the year progresses, spurred by job creation and higher salaries, together with increased spending in anticipation of and during the World Cup. We expect consumer products businesses to continue to lead the way, Professional business stabilizing during the second quarter and growing during the second half of the year and parent roll sales still trailing due to more tissue required for consumer product sales, but becoming less of a drag as the year goes on.

With respect to raw material costs, fundamentals support lower dollar prices versus last year, but we will experience some months of higher costs, both sequentially and in some cases versus last year, stemming from the oil shock the world is experiencing. We hope the impact will be limited in both strength and duration with prices returning to underlying market fundamentals.

In the meantime, we're focused on price realization. We just implemented price increases in most of our businesses averaging 4%, and we'll continue to apply our revenue growth management capabilities. And we'll continue to be focused on operational efficiencies and ensuring another good year in cost reduction efforts.

Of greater importance, we continue to make good progress on our KCM+ strategies. Our core businesses are performing well, and our diamond categories are accelerating growth behind consumer-centric, relevant and differentiated innovation together with greater engagement and improved commercial execution. Further, we're making inroads in private label and have identified opportunities to strengthen the North American supply chain together with our strategic partner. When it comes to new areas of growth, in the coming quarters, we will be working to consolidate and to increase efficiencies in adjacencies.

Further, we continue to make progress on pet food and are actively analyzing the Kenvue opportunity. All in all, our KCM+ initiatives focused on accelerating growth are going well. Equally important, we have specific initiatives to develop our skill set, better utilize data to define consumer needs and engagement, work closely with our retail partners to remain a supplier of choice and continue to improve and where needed, transform our end-to-end cost structure in an increasingly dynamic environment.

Effectively deploying and efficiently utilizing the most advanced technology solutions is the fundamental layer to support and drive all these efforts and time is of the essence. We hope these comments provide a good picture of where we stand and why we are so excited about KCM's present and future.

With that, let me open the call for questions.

[Operator Instructions]

We'll take our first question from Ben Theurer with Barclays.

Two quick ones. So first, if I remember right, about a year ago, the strategy over summer in terms of campaigning, promoting, you took a little bit more of a hands-off approach, a little bit more on the back, not as aggressive as in prior years. So just wanted to understand with the announcement you just had the 4% price increase on certain products that you're pushing, what should we expect from you guys as we go into the summer promotional campaign that usually kicks off by the end of the second quarter? That's my first question. And I'll have a quick follow-up.

Sure, Ben. Thanks for the question. We will follow the same path as last year, meaning we will not be as aggressive as in the past, although one thing that is happening is that the summer promotional season continues to expand in length. It's pretty much has already started here in mid-April. And it might have to do with the World Cup and all of the retailers wanted to get ahead of that event. But we're starting to see more promotion out there. But in our case, we continue to be more disciplined about it to ensure we can keep the value of our categories.

Okay. And then a quick follow-up on the commodity cost side because I kind of like missed the commentary because obviously, you do have some exposure to oil price derivative products. So I just wanted to understand how the current surge in oil prices is kind of like affecting you on what might be more like, call it, a petro-exposed or just oil derivative exposed raw material cost pressure.

Yes, we are seeing some pressure on oil derivatives. But so far, and given where things stand, we believe it will be limited both in strength and duration. But that's where it stands right now. And as it is, it would have some impact, of course, on our cost and our margins, but we don't think it will be significant. Now things can change, of course, but where it stands right now, again, limited in both strength and duration.

Our next question comes from Bob Ford with Bank of America.

Pablo, can you comment a little bit about how clients and competitors are responding to your 4% price hike? And when it comes to the North American production footprint with Kimberly-Clark Corp, how should we think about the magnitude of the opportunity as well as the economics of that? And is there a role for you in the very short term to help address the inventory loss that Kimberly-Clark Corp suffered in California? And then lastly, how are you thinking about Kenvue Mexico with respect to the final deal terms and the closing date?

Sure. Thank you, Bob, for the questions. First, on retailers and competitors responding to our price increases. I mean we're right in the midst of implementing those. It was really at the end of March, early April. We haven't seen anyone respond so far, not unusual because you know they always lag. Now it might be a little bit more difficult this time around to see that response and to even have this reflected quickly.

Because again, we're already starting with the summer promotional season. And although we're going to be more disciplined, that always has an impact. So we expect that as this season goes through and we get into the third quarter, then we might see competitors react and our own prices reflect fully on going forward.

When it comes to the U.S., I mean, we continue to have very good meetings with our partner to understand our regional footprint and what's best for everyone and how we can have the most competitive and efficient footprint in the region. And we're finding really good opportunities that I think will take a little bit of time to materialize, but we're seeing some very interesting opportunities, both for them and for us, and we continue to work on those going forward.

And I think some of them will start to materialize end of this year, probably next year. Hard to tell the magnitude of the opportunity. We believe it's important. But again, we're starting with a couple of projects to make sure this goes the way we all expect and continue to look for opportunities.

In the short term, yes, we are helping them bring back their inventories given what happened in the warehouse in California. So in the short term, we'll be helping with that.

And then when it comes to Kenvue, we are in the process of the due diligence of the business and we're starting our discussions with our partner on the business. As you know, they're moving forth with their integration plans. And as part of that, we're discussing with them what would be next for KCM Mexico. I expect that we will have a more complete analysis and discussion with them probably May, early June and hopefully have a decision by the end of this quarter or early next quarter on whether we move forward with this or not, but things are looking good.

We'll take our next question from Renata Cabral with Citigroup.

Congrats on the results. So my first question is related to costs and a follow-up actually. As considering the current level of the FX, it's natural we consider that those margin improvements can carry over along the year, but we are now in a situation of volatility in terms of raw material prices. Just to check the view regarding this margin trend along the year broadly, if you can?

And the number two is related to the consumer division that had a growth of 5%. We see the slowdown in the Mexican economy. If you can give us some color in terms of a category that is doing better, would be great as well.

Thank you, Renata. Well, first, on the cost side, yes, you're right. I mean, the FX will continue to be a tailwind. And again, if raw materials were driven at this moment for by fundamentals, we would continue to see improvements, and that would also be a tailwind.

But again, we're experiencing this uncertainty right now with the oil shock and the impact that, that's having on all derivative commodities. So that will have an impact, but we still believe that we have enough with our efficiencies, our cost reduction program and the FX to continue to post margins within our target and most likely at the upper range of our target even with that cost impact. Now if that goes away, then we could see further improvements throughout the year.

When it comes to the market, yes, it still feels, as I mentioned, the economy is still stagnated. I mean we are not seeing great growth and domestic consumption is still pretty subdued. And we continue to see the same dynamics in our categories as we saw second half of last year. So that's soft volume growth and some pricing in most of the categories, particularly on the core categories, that's bathroom tissue, diapers, napkins, a little bit more growth in categories that have further room for penetration like incontinence and wipes, et cetera. So no changes really there on the dynamic on the categories.

So all in all, given where the categories stand, our results of 5.4% in consumer products and I think particularly 3.7% in volume, we believe those are pretty strong given that there's not a lot of volume growth in the categories. So that also means that our shares are strong, and we continue to make inroads with the innovation we're putting out there in the market.

So good start to the year, and we feel good about where we're positioned and a lot more coming in terms of innovation and commercial execution to continue this trend that really started in the second half of last year with consumer products. We had a very strong 3 quarters sequentially in Consumer Products, and we hope we can get that to continue.

We will move next with Alejandro Fuchs with Itau.

Pablo, Xavier, and team, congratulations on the results. My question is just a very quick one regarding the MXN 10 billion increase in debt that you posted during the quarter. I wanted to see maybe, Xavier, if you can elaborate a little bit more on what the use of proceeds is -- and if this has anything to do maybe with, as Pablo was mentioning, a potential deal with Kenvue and KC in the U.S. in the second half of the year, maybe.

Alejandro, in principle, the placement was not tagged to anything directly. As you know, we usually like to renew debt in advance when we see an opportunity, given the size of the deals that you need to do for them to be efficient. We prefinance, let me use that word, 2 or 3 years ahead. And the last 2 debt payments that we did came from our cash. Having said that, if we were to do anything in terms of M&A coming forward, this places us in a good position to be already prefinanced for that. I hope that answers it.

[Operator Instructions]

We will take our next question from Antonio Hernandez with Actinver.

Congrats on the results. Just a quick one regarding Away from Home that continues declining. What is your perspective here? Do you see any data that reflects an overall improvement, maybe how you started the quarter versus how you ended the quarter?

Thanks for the question, Antonio. Look, Away from Home was lower versus last year, but it did have an important sequential improvement. So we see the business starting to improve. As I've mentioned in prior calls, this is a business that suffered more the effects of the slowdown of the economy and the adjustment in inventories by the trade. And we continue to see some of that.

But again, our volumes are starting to improve sequentially. And we believe this might be -- the second quarter might be still a little bit flattish. But given where we see inventory levels at this stage in the trade and our plans going forward, we expect this business to grow in the second half of the year. So it's had a little bit of a rough patch, but I think it's coming under control and the right trend. And again, second half, we should be growing the business nicely.

And at this time, there are no further questions in queue. I will now turn the meeting back to Pablo Gonzalez for closing comments.

Well, nothing more to say. Just thanks so much for participating in the call. We really, really appreciate it. And as always, if there's further questions, you can certainly reach out to us, and we'll be more than glad to talk to you. So thanks again, and have a great rest of the week.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Thank you, Nicki.

Hello, and welcome, everyone joining today's Kimberly-Clark de México Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the meeting over to CEO, Pablo Gonzalez.

Thanks so much. Hello, everyone. Thanks for participating on the call. We wish you and your families a terrific 2026. We'll go straight to results and then make some brief comments about the quarter and our expectations going forward. So I'll pass it on to Xavier.

Thank you, Pablo. Good morning, everyone. Our sales reached MXN 14.1 billion in the fourth quarter, an increase of 2.1% versus the same period of 2024. Total volume was flat and price/mix improved 2%. Growth was driven by consumer products, which expanded 5.5%, supported by healthy year-over-year growth of 1.4% and price/mix of 4.1%. Export hard rolled sales continued to decline as we converted more tissue towards higher-value domestic products.

Sequentially, results continued to improve from Q3 to Q4 as sales increased 4.8%, with Consumer Products up 8.5% primarily volume less, reflecting strong commercial execution, the planned innovations to products and improved market dynamics. Cost of goods sold was flat and as a percentage of sales improved by 130 basis points. Compared to last year, virgin fibers, recycled fibers, SAM and resins were favorable, partly offset by higher fluff costs. The peso remained supportive with an average appreciation of roughly 8%.

Our cost reduction program once again delivered solid results, generating approximately MXN 500 million in savings during the quarter, mostly within cost of goods sold. These efficiencies came from sourcing, materials optimization and ongoing process improvements across our operations. As a result, gross profit increased 5.4% and our margin reached 40.4%, reflecting both disciplined revenue management and cost tailwinds.

SG&A expenses increased 0.8% year-over-year and as a percentage of sales decreased 22 basis points as we continue to carefully prioritize brand investment and overhead efficiency. Operating profit grew 9.2%, and our operating margin expanded to 22.9%. We generated MXN 3.7 billion of EBITDA, an increase of 6% with an EBITDA margin of 26.4%, a 140 basis point sequential improvement and 100 basis point expansion versus the fourth quarter of 2024.

Financing cost was MXN 398 million compared to MXN 350 million last year, driven mainly by lower returns on cash balances. Net income reached MXN 2.2 billion with EPS of MXN 0.73, a 23% increase year-over-year. For the full year, sorry, sales reached an all-time record of MXN 55.4 billion, up 1.1%. EBITDA was MXN 14.1 billion, representing 25.5% of sales, while margins declined 170 basis points due to the cost pressures we faced, particularly during the first half of the year. Net income was MXN 7.6 billion or 13.7% of sales.

Throughout 2025, our cost reduction initiatives delivered MXN 1.95 billion in savings, driven by sourcing, operating efficiencies and product design optimization. We invested MXN 1.8 billion in CapEx, consistent with our plan and focused on technology upgrades, cost reductions, efficiencies and strategic capacity additions. We also repaid MXN 3.7 billion of debt, paid MXN 6.2 billion in dividends and repurchased nearly 43 million shares, equivalent to 1.4% of shares outstanding.

We closed the year with a strong and healthy balance sheet. Total cash stood at MXN 9.7 billion. Net debt-to-EBITDA was 1.0x, and EBITDA to net interest coverage remained very solid at 10x. Thank you very much. I return it to Pablo.

Thanks. So we continue to operate against a soft consumer backdrop. However, we've delivered year-over-year growth, strong margins and a meaningful sequential improvement. Consumer Products performance was notably stronger, supported by innovations and commercial initiatives. Overall, consumer confidence remains subdued and private consumption growth has moderated.

Within retail, value formats and private label continue to gain share as shoppers seek savings, while e-commerce growth remains robust. Against this backdrop, our categories continue to show resilience, and our brands have benefited from our strong innovations, price and mix discipline and market execution. As we get into 2026, we have solid plans to strengthen our core businesses, accelerate growth in our diamond categories, expand into adjacencies and new categories, most notably in pet food as well as participate in markets we have traditionally not emphasized in the past, such as private label.

On costs, we're seeing the benefits of lower pulp, recycled fibers, resins and superabsorbent materials, which together with a stronger peso, will provide important tailwinds as we move into 2026. Cost reduction program remains a key structural lever, and we will stay aggressive in sourcing, product design and process efficiencies. A few additional comments before we open it up for Q&A. First, Kimberly-Clark Corporation, our strategic partner, announced in November its agreement to acquire Kenvue. This combination will create a leading global health and wellness company with a complementary consumer portfolio and expanded capabilities.

As the transaction progresses towards closing expected in the second half of 2026, we will evaluate potential strategic implications for Kimberly-Clark de México, including the possibility of integrating Kenvue's operations in Mexico. Our focus will remain on achieving operational excellence and capturing value-accretive growth opportunities for the business. Additionally, we will hold our Annual Shareholders Meeting on February 26, where the Board will propose a dividend increase in the high single digits, reflecting our solid cash generation and confidence in future performance.

We will also propose a share repurchase program, which will remain significant and aligned with our commitment to disciplined capital allocation. One final note. Starting with the first quarter results, we will be releasing them to the public on the third Tuesday of the month after the end of the quarter as soon as the Board approves them at the regularly scheduled meeting later on the same day, and we will hold our call early on Wednesday morning.

In summary, looking ahead to 2023, we face 2026, we face external risks, including ongoing tariff uncertainty and a slower domestic demand backdrop tied to softer formal employment and slower remittances. However, we are optimistic. We are entering 2026 with better momentum than 2025, and we have mitigating factors to those risks, including our leading positions in essential categories, portfolio initiatives focused on value and affordability, continued excellent execution with customers and, of course, a robust balance sheet. With that, let me turn it over to questions.

[Operator Instructions] Our first question comes from Alejandro Fuchs with Itaú.

Congratulations on the results. I have 2 very quick ones. First for Pablo. I was wondering, Pablo, if you could comment on the expectations for this year, maybe on competitive environment, what you're expecting? And maybe if you can elaborate a little bit more into going into private label, how relevant do you think this will be for the business in the medium to longer term? And then the second one, very quickly to Xavier. I was wondering, Xavier, if you could give us some color on the tax rate during the quarter. I think it was quite low. So maybe you could explain a little bit more what was the case, that would be very helpful.

Thanks, Alejandro. Thanks for being on the call. Yes, first, on the competitive environment, I mean, we faced a pretty competitive environment during 2025, again, given that the economy is not growing much and consumption is subdued. I don't think it was more aggressive than in some years past, but it certainly was, I would say, maybe a tidy more aggressive. And we expect that to continue this year. I mean we expect the economy to grow at a higher rate not what it should be growing, but certainly at a higher rate. So we expect categories to expand a little bit, but competitors to be aggressive to try and gain share and grow at a faster clip than categories.

So nothing that we haven't seen in the past. This is the nature of our categories. And against that backdrop, I guess, we performed very, very well, particularly in consumer products during the second half of the year and we're entering with that momentum and with stronger shares into 2026. And we've got plans on innovation, price mix, et cetera, that I think will carry us forward. So we're pretty optimistic with the year as a whole. It might start a little bit slow, but I think for the year as a whole, we're pretty optimistic.

On private label, as I mentioned in my opening remarks, and you guys know this, I mean, given the consumer is so stretched, private label has been gaining ground in many categories, not only ours. We've been able to fend off on our part the private label, given our -- the strength of our shares, but it is no doubt increasing. It's important and both hard discounters and overall retailers are pushing it forward. So what we decided to do is to participate more aggressively in private label, and we put together a dedicated team with dedicated assets to look into this and with some early successes. And we will be going forward, competing on private label and of course, competing overall in the market for this business. So we expect this can be a benefit for us going forward. And together with, again, strengthening our core, accelerating diamond categories, being more aggressive on the supply chain front with Kimberly-Clark Corporation, Private label, I think, can add an additional opportunity for growth in KCD Mexico's case. Javier, on the tax rate?

Sure. Alejandro. You are correct in pointing out that the tax rate -- the effective tax rate shown in the fourth quarter was lower than what we traditionally have. And that, of course, also had an impact for the full year. This comes from an accounting adjustment that primarily reflects improvements in our estimation processes and those yielded a more accurate estimate, and that allowed us to reverse some provisions. This adjustment does not result from any change in our tax strategy nor from the adoption of new tax positions or any aggressive tax assumptions. And it will also not impact how much taxes we pay. This is -- these are mostly accounting and noncash adjustments. And let me underline that we continue to apply a consistent, conservative and very responsible approach to tax accounting. So I hope that helps.

Our next question comes from Ben Theurer with Barclays.

Congrats on the results. Two very quick ones. So one, obviously, 2025, you've done a relatively good job on continued cost savings initiatives. And I mean, the run rate was really good. So if you could share maybe how you think about that into 2026, also in the backdrop of the better environment that you're expecting? And then as it relates to raw materials, I mean, I would say it was mixed, but obviously, FX supportive. So how do you feel about the raw material price environment and then obviously, as FX as a tailwind and how that then ultimately comes down to profit margins into 2026?

Thanks, Ben. Thanks for the questions. First, on the cost reduction program, as we've said before, I mean, this is really an essential part of our culture. And that's why year-over-year and every year we deliver very strong results. And we are confident 2026 will not be the exception. We have identified already upwards of MXN 1 billion in savings for this year and most likely will be close to what we achieved in 2025. And again, this is just part of our culture of continuously looking for opportunities in product design and sourcing and materials on efficiencies to continue to improve our execution operationally.

So we expect another strong year on our cost reduction program, and we are off to a very, very good start. When it comes to raw material price environment, I mean, we're entering 2026 in a very different position as most of our raw materials are -- have come down, and we don't necessarily expect them to continue to go down throughout the year. But certainly, they will compare very, very favorably at least through the first half of the year and maybe through the whole year. I mean it's hard to tell these things can -- they're very volatile and they can change. But the scenario we're looking at right now is pretty favorable to start the year together with the exchange rate. So we do expect, as you could see in the fourth quarter, that to trickle down to our margins on the bottom line.

We will move next with Antonio Hernandez with Actinver.

Congrats on your results. I wanted to check what's the current standpoint on the Nutec partnership? At what stage are you currently in terms of operations, distribution and sales?

Sure. Thanks, Antonio. We -- as you know, we entered the pet food business in the second quarter of last year and really have been working on ramping that up over the last half of last year, and that will continue to be our priority this year. We continue to gain space at shelf as consumers have reacted very, very positively to the products, I would say, particularly to the premium offering, so Prime Care. And as that has happened, of course, retailers have become more and more interested in giving us more space, putting the brand out there, and that is allowing us to increase our penetration. And that will be our main focus still on 2026. As we said from the very beginning, this is a category that will contribute to our results in the medium term. It won't be immediate. But I think we continue to make very good strides, and we believe 2026 will be a breakout year for us in that sense. And in the coming years, it should be a category that delivers more in terms of both top line and bottom line for Kimberly-Clark de México.

We will move next with Renata Cabral with Citibank.

I have one that is a follow-up about the consumer segment that you just commented. Just would like to ask if you can provide some color in terms of price mix for this quarter. And since last quarter, I think it's performing really well, and you already commented something about why this is going well. And my second question is if you can comment something about dividends and buybacks for 2026.

Sure. First, on the price/mix, Renata, I mean, as we mentioned, Consumer Products overall grew 5% for the quarter. Volume was a little bit over 1% and price/mix was a different 4%. And when you look at price and mix, if you break it down, it was pretty much even, 2.1% price was up and mix was up 2%. And again, this is not only a testament to the discipline on our pricing, but also on our good commercial execution and the effort we've placed on improving our mix in all of our categories and driving consumers up to the higher tiers. And we've been very successful, for example, in doing that in bathroom tissue as we move users up to Cottonelle.

So even in a very, I would say, subdued consumer environment, we've shown that we can bring mix and price to the table. So those 2 components together with gaining a little bit of volume, that's what really has delivered a very strong showing for Consumer Products in fourth quarter and also third quarter. So we'll continue to work on that to think about where we see pricing opportunities, continue to push for a stronger and better mix and of course, continue to look for ways to grow the categories and volume. So it's really the combination of the 3 that allowed us to post these results, and that will that's the objective for 2026 is to continue to move on all those 3 fronts.

When it comes to dividends, as we mentioned, we will have our shareholder meeting late in February, and we will be discussing with the Board on February 10, the dividend that we want to propose and the repurchase program that we want to go forward with. But we are -- we will -- we know we'll be proposing a dividend increase in the high single digits. And again, this reflects our solid cash generation and confidence in future performance. So it will be another year where we provide this high single-digit dividend increase into 2026.

And we will also be proposing a share buyback, which will continue to be significant.

We will move next with Guilherme Mendes with JPMorgan.

I have 2. First, on your short-term and long-term thoughts about the degree of cannibalization between private label and your own branded portfolio. Where do you see it now? And long term, is there some, let's say, mindset around what degree of cannibalization this can make to your long-term volumes in your core branded brands? And secondly, if you could share more thoughts around what the Kenvue potential acquisition in Mexico could mean in terms of incremental revenue, CapEx, returns? That's it.

Thank you. Thanks for the questions. First on cannibalization. Look, with our strategy of multi-tier, multichannel, multi-brand in our categories, our brands have held up steady very, very nicely. I mean our shares are very strong in many categories growing, even though private label in the category is growing. So in many, many instances, we're the #1 player with very strong shares and then private label is now the second player in those categories. So we will continue to focus on our brands, and I want to be very, very clear about that. Our brands are our priority. We're a branded consumer products company.

But given the opportunity for growth in private label and the fact that we believe we could be good partners with some of our clients in strategic areas, we want to participate -- and -- but our, again, multi-tier innovation program, multichannel, multi-brand continue to be the priority. And as it's held up very strongly until this point, we expect it to continue to hold on very strongly going forward. We just see an added opportunity for growth if we can participate in private labels. And as we've started to do this, we've seen some early success. So we'll see what it means going forward.

But I can't stress enough that our main priority is our brands, innovation behind our brands and bringing to consumers the best products at the best cost in every single tier, in every single channel with the best brands, which -- and preferred brands, which are ours. On the Kenvue issue, and thanks for asking that question. As I mentioned, we've just started conversations with our partners -- with our strategic partner. And these conversations will evolve here through end of January, February, March. By -- I'm going to say by April, we should have a much clearer understanding of where we stand, what the Kenvue business in Mexico would mean for Kimberly-Clark de México and whether we can come to an agreement with our strategic partner as to how to move forward.

So we'll have more information certainly in our conference call when we report first quarter results in April. But let me just say this. Our understanding is that on the top line, Kenvue, Mexico is about roughly $200 million in sales company. So it's about 1/10 of where we stand. So not huge, but also not insignificant. It's a nice size, and it would be a transaction that would add quite a few categories that we're interested in, in the health and wellness.

And as we've always said, categories that have great growth potential, categories where we see we can add value given the way we operate innovations, brands, channels, tiers, et cetera, categories where we think we can add value not only to consumers but also to clients and that in the medium term would be accretive to our, of course, top line, but also bottom line results and margins. So early. Again, we've just started the conversations, but it's a good opportunity for us. Again, not a huge one, but an opportunity that opens very nice windows of growth going forward that would add to our core diamond categories, new categories where we've entered like pet supply chain integration with Kimberly-Clark Corporation. And if this happens, then Kenvue categories. So the whole scenario, I think, paints a very good picture of the possibilities of growth for Kimberly-Clark de México going forward.

Our next question comes from Bob Ford with Bank of America.

Congrats on the results. Pablo, given the concerns around private label, could you maybe provide some examples of innovations across major categories and price tiers? And maybe touch on like some of the materials innovations, right? We're going through this pretty big technology cycle. And I'm just curious if you -- if there are any things that have been patented or maybe a product cycle that you feel really comfortable that you can maintain leadership in for an extended period of time?

Yes. Thanks, Bob. Thanks for the question. These are all very, very dynamic categories. And I can talk about a few of the things we did this past year. I wouldn't want to get ahead of myself and talk about 2026. But I'll give you some color on where we stand. But in 2025, for example, we -- in bathroom tissue, we introduced new products in a whole range of products. And particularly, we were very aggressive in bringing new technologies into the premium category with Cottonelle with great, great results. I mean our sales in Cottonelle are growing double digits and continue to do so very strongly. When you look at diapers, we also brought even a Tier 7 diaper to continue to premiumize the category with softness that is unparalleled in the market and of course, the absorbency that consumers come to expect from Huggies.

And we've also improved even our economy tiers with now stretchable ears in diapers, which is a first really for the economy tiers. So again, across all of the tiers, -- we've improved our products in feminine care. We brought a new nocturnal pad that it's considered by consumers the best product in the market by an important margin, and it's just a new platform that we're bringing to that category. And incontinence, we brought new products, again, in pads and panty liners that have also preferred by consumers that also offer a new platform. So very, very excited about what we've done and even more so with what we see going forward because I think we're going to be bringing to market some new technologies, first-in-market technologies and in some cases, first to the world technologies that I think will continue to strengthen our platform, strengthen our brands and strengthen our position in the market.

So this is never ending, and I'm very excited about our plans for 2026 and innovation, but already looking at '27, '28 and making sure we bring very relevant innovations to market and try and step ahead -- and keep stay a step ahead of competition in every tier in every channel going forward. So sorry, I can't say more about '26, Bob. I'll share more as we go through the year and bring those innovations to market. But as you can see, I'm very, very excited with what I see we can bring to the table in this year.

No, that's definitely well communicated. It's a great teaser. With respect to maybe playing a greater role in the supply chain, can you touch on what you think your competitive advantages are, right? I mean you're clearly doing a much more sophisticated kind of tiering of products. You're doing more shorter production runs. I'm familiar with some of the productivity rates that Kimberly-Clark de México versus the rest of the system. Beyond that, what should we think about when it comes to maybe selecting Mexico to play a much bigger role in the North American supply chain?

That's a great question, Bob. Look, we are at a great point on that issue because after working with Kimberly-Clark on specific projects over the past years, we really have -- it's come to the point where we're sitting down, we're taking a look at the whole supply chain. We are being completely transparent in putting the numbers out there, costs, efficiencies, logistics, et cetera, and identifying the biggest opportunities going forward. And as you mentioned, in many respects and particularly when it comes to certain of the tiers in the market, we have advantages because of the way we operate, because of our costs and because of how we know to manage different tiers, which, again, it's much easier said than done.

So we're finding very interesting opportunities. But the key thing is where I started that it's not now just hey, we found this project, how do we move forth together with it. It's really a holistic look at the supply chain, figuring out where we can add value, figuring out where they can add value and putting all of that together so that when we think of a project now, it's really for the medium and long term. It's not just a one-timer. We will still have some one-timers, but it is becoming more of a, hey, can we think of certain area of the U.S. where Mexico would be better positioned to supply products and put us in a better competitive position overall in such a market. So we're delighted that that's where the conversations stand. And we just had our Kimberly-Clark Board members attend our Board meeting, and they expressed the same confidence that we're finding very interesting opportunities and that we're very confident going forward our supply chains can come together and deliver very positive improvements for both Kimberly-Clark Corporation and Kimberly-Clark de México. So again, another area where we're very excited and where we think that '26, '27 could be breakout years when it comes to really determining how to play together.

[Operator Instructions] We will move next with Jeronimo de Guzman with INCA Investments.

I had 2 questions. The first one was just a follow-up on what you talked about with the shift. You talked a little bit more about the shift or increasing the emphasis on private label and value. And I was just -- you kind of touched upon it, but I just wanted to see if we should expect any kind of impact on pricing/mix or margins as a result of this.

No, we don't think so, Jeronimo, certainly not in the short term. And in the medium to long term, we'll see how successful we are and how many -- how strongly we can participate. But of course, and you know our culture, we're already working into, okay, if we are very successful and can participate meaningfully, how do we change our cost structure so that we continue to deliver the margins that we've targeted and that continue to be our target. So no, don't expect a change anytime soon on that target. And we will find ways to, over the medium to long term, be there within that target range.

Okay. Makes sense. And then a question on just how are you thinking about pricing because you're mentioning the raw material environment being very supportive, but you're also talking about competition continue to be aggressive, trying to gain share. So yes, kind of how are you thinking about pricing going forward?

Thanks for the question. We are looking at all of the opportunities on pricing because notwithstanding, as you say, that raw materials are a tailwind right now and so is the exchange rate. These are very volatile, particularly -- well, both of them. And we've seen in past years that things can change relatively quickly. We don't expect that to happen, but it could. So we're ready. We're ready to move on pricing. And with our revenue growth management initiative, we're always looking for opportunities, both on pricing and mix. So we -- I would venture to say that we will -- you will see some pricing coming to the market this year and aiding our results. And again, we'll continue to work on the mix, and you will see some mix also come into the equation and also help our results during the year. No specific plans at this point, but pretty confident that both factors will be relevant and help us with the results in 2026.

Our next question comes from Juan Guzmán with Scotiabank.

Congrats on the strong performance. Just one quick question here as most of my questions have already been answered. Regarding Away from Home, given this 10% contraction that you mentioned due to channel inventory adjustments, what's your outlook for this business going forward? And even when it's early in the year, what trends have you been observing recently? And what strategies are you implementing to recover sales growth here? And that will be it.

Thanks, Juan. Thanks for the question. Yes, not happy with the results on the professional side. Again, a combination of a softer economy and our wholesalers reducing their inventories given their concerns on the market. Having said that, again, we believe the economy will pick up a little bit this year. And particularly on that side, when it comes to hotels, restaurants, et cetera, we will definitely see the benefit of at least some of the games of the World Cup being played in Mexico. And not just because of some of the games, I think tourism overall will be a positive for the country this year.

So we expect really this to turn around in the coming -- I don't know by the first quarter, I think we'll do quite better, and we're already seeing much better performance in the first quarter, early, but we're seeing much better performance in the first quarter. But certainly, by the second quarter, I think we'll see better performance. And our strategies, same as in consumer products, we're very clear of the different areas we want to go after, and we're bringing also innovation and interesting -- very interesting innovation to the different categories, and we're working very, very closely with our wholesalers to go after specific accounts and to try and premiumize in different categories. So not very different in terms of the strategies that we're pursuing in Consumer Products. And again, we expect this to turnaround certainly by second quarter, and we expect the business as a whole to grow nicely throughout the rest of the year. And again, we're already starting to see early signs of that turnaround, but I think it will take a little bit more so maybe by second quarter.

And at this time, there are no further questions in queue. I will now turn the meeting back to Pablo Gonzalez for closing remarks.

Well, thanks again, everyone, for participating. As you can see, very exciting things going on at Kimberly-Clark de México, and we -- we will have more to share when we have our call on April, certainly on many of the initiatives that I just mentioned on innovation, on Kenvue, et cetera. So looking forward to it and looking forward to have a very good year at Kimberly-Clark de México.

And with that, again, thanks so much, and I hope that you also have a terrific 2026. Thank you all.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good day, everyone, and welcome to Kimberly-Clark de México Third Quarter 2025 Results. [Operator Instructions] Please note this call is being recorded, and I will be standing by. It is now my pleasure to turn the conference over to CEO, Pablo González. Please go ahead.

Hello, everyone. I hope you're doing well, and thanks for participating on the call. We'll go straight to results, and then we'll make some brief comments about the quarter and our expectations going forward. Xavier?

Thank you. Good morning, everyone. Results for the quarter were better, with net sales growing and gross and operating profits recovering. During the quarter, our sales were MXN 13.4 billion, a 2% increase versus last year. Hard rolled sales impacted total volume, which was flat and price/mix was up 2%. Consumer Products grew 5%, 1% volume and 4% price/mix, while Away from Home remained flat. Exports were down 15%, impacted by a 32% decrease in hard rolled sales, while finished products grew 7%. Cost of goods sold increased 3%. Against last year, SAM, resins and virgin fibers were favorable. Recycled fibers were mixed, while fluff compared negatively. The FX was slightly lower, averaging 1% less.

During the quarter, our cost of goods sold reflected the higher prices of raw materials from prior months and very significantly, the much higher FX, including the hedges as those trickled down the inventory layers. Our cost reduction program once again had very good results and yielded approximately MXN 500 million of savings in the quarter. These savings are mainly at the cost of goods sold level and are generated by sourcing, materials improvement and process efficiencies.

Gross profit was flat and margin was 38.7% for the quarter. SG&A expenses were 4% higher year-over-year and as a percentage of sales, were up 30 basis points as we continue to invest behind our brands. Operating profit decreased 4% and the operating margin was 21.3%. We generated MXN 3.4 billion of EBITDA, a 3% decrease, but within our long-term margin range at 25%.

As mentioned, the benefits of better raw material prices and a stronger peso take time to show up on the actual cost of goods sold, due not only to inventories, but also to contract transit time and particularly in this case, the currency hedges. Having said that, our gross margin did improve 50 basis points sequentially from the second quarter to the third quarter. That improvement does not go down to the operating profit or EBITDA level because the SG&A remained constant and was, therefore, higher as a percentage of sales because the third quarter sales are traditionally lower than the second quarter sales.

Cost of financing was MXN 404 million in the third quarter compared to MXN 287 million in the same period last year. Net interest expense was higher at MXN 401 million versus MXN 290 million last year, despite our lower gross debt because we earned less on our cash investments. During the quarter, we had a MXN 3 million FX loss, which compares to a MXN 4 million gain last year.

Net income for the quarter was MXN 1.7 billion with earnings per share of [ MXN 0.56. ] We maintain a very strong and healthy balance sheet. Cash position as of September 30 was MXN 11 billion. We have no debt maturing for the rest of the year and maturities for the coming years are very comfortable. Net debt-to-EBITDA ratio is 1x and EBITDA to net interest coverage is 10x.

Over the last 12 months, we have repurchased close to 50 million shares, around 1.5% of shares outstanding, which brings the total payout to shareholders to approximately 7%. And with that, I turn it back to Pablo.

So we continue to operate against a soft consumer backdrop, but we managed to increase sales and post EBITDA margin within the target range. Growth in Consumer Products was significantly better supported by innovations and commercial initiatives, together with a strategic decision to reduce spending during the heavy summer promotional season to protect the value of our brands as well as reduce the negative price effects. Volume was slightly ahead of last year, an important improvement, but consumers remain stretched and cautious given the increased uncertainty, job growth deceleration, remittances slowdown and overall lack of economic growth.

We see no significant catalyst for this to change in the short term and are strengthening strategies accordingly. Still more relevant and differentiated innovation, more effective engagement with consumers efficient execution hand-in-hand with our clients, and importantly, relentless focus on our most important opportunities by category, channel and brands will guide all our actions.

In a market that's not growing much, gaining share and playing in areas where we haven't participated at least not aggressively, will be key to accelerate our growth. We look forward to sharing more details on the strategies as we get into 2026. The same holds true for Away from Home business, and we expect exports of finished products to continue to grow and accelerate in the coming years, behind a concerted effort with our partner, Kimberly-Clark Corporation.

With respect to costs, we have yet to see the full effect of lower input prices on results and lower sequential volumes typical of the third quarter meant we had weaker operating leverage. Despite these headwinds, margins remain strong. As we get into the final stretch of the year and particularly into next year, we will see lower costs reflected in our numbers.

We expect lower pulp prices, stable recycled fibers, lower resins and superabsorbent materials plus a stronger peso to be tailwinds going forward. In summary, our results continue to improve. And despite an expected continued weak consumer environment, we're executing strategies that will translate into stronger results in 2026 and the years to come. With that, let's turn to your questions.

[Operator Instructions] We'll take our first question from Ben Theurer with Barclays.

Congrats on the results despite the challenging environment. So I wanted to follow up a little bit on just the consumer sentiment and what you've been seeing across the different categories. So maybe help us understand and kind of like getting a bit closer into that 4% price/mix change. How are you able to kind of like implement that and at the same time, actually get about a 1% volume growth, just given the consumer is weak, but it felt like a very good execution on price mix with volume growth. So that would be my first question.

Sure, thanks for the question. Look, as I mentioned, we see a stretched consumer. And this is [ not news of ] uncertainty. And as I mentioned, job growth has decelerated, remittances have slowed down. I mean overall, the economy is pretty slow and consumers' sentiment is not at its best, if you will. So consumers are being very careful in how they are spending. We do see a fork, if you will, with consumers that continue to spend on premium products, but there are those who are trending down from value to economy products, not at a very marked rate, but there's certainly something happening there given the -- how the consumer is stretched. So the way we were able to put all of this together -- and let me say, by the way, the growth in our categories is pretty muted. Some of them, the categories that don't have such high penetration like kitchen towels and others are growing at higher rates. But even those the rates have slowed down a little bit. And the more, if you will, mature categories are flat or slightly growing when it comes to volume. So what we did is, one, Remember, we decided not to play as aggressively on the summer promotional season. Because what we were seeing over the past couple of years is that when you did that, the price would take a hit not only within the promotional season, but then beyond that, because consumers ended up with some inventory on their hands. So then it was a little harder to move volumes forth. So we were very careful on how we manage that, and I think we were successful in doing so. Plus the fact that we are through our revenue management -- revenue growth management capabilities found certain instances where we could adjust pricing and move forth. So that's how we were able to keep prices going and then volume really helped because of innovation and all of our commercial activities during the third quarter. So it was really a combination of executing on price and innovations that allowed us to put together both growth in price and for the first quarter in the year, growth in volume.

Okay. And then just one quick follow-up. You've called out the softer hard roll sales volume. Was there a technical issue? Is it a demand issue on the export side? What's been driving that?

Really, I think what's happening there is that there's a lot of supply of hard rolls in the U.S., a combination of companies with excess capacity sending it to the U.S. and then maybe a little bit of companies buying before some of the tariffs came into effect. So there's paper out there that I think the system is going through. And hopefully, that will become more normalized, if you will, in the fourth quarter, certainly, I think by the first quarter of next year. But overall, just oversupply in the market of hard rolls in the U.S.

We will move next with Bob Ford with Bank of America.

Pablo, I also was impressed by the growth in consumer given your intent to stay away from some of the summer promotions. Can you give some examples maybe of some of the more successful innovation and execution of efforts that are enabling you to improve pricing and take share? And with respect to the export mix between hard rolls and finished products, can you give us a sense both in volume and value in terms of the breakdown of those exports? And then how should we think about current capacity utilization rates for both pulp and finished product?

Thanks, Bob. Thanks for your question. Yes. Look, I mean, when it comes to innovation, as I mentioned earlier in the year, we have strong innovations for all of our categories throughout the year. And by the way, we have a very, very strong pipeline for the coming years. So we're very excited about that. And a couple of particular examples are on the diaper front, where we pretty much improved on every single tier of our offerings. And when you take a look at our shares, we're -- even though the categories, as I said, pretty flat, we're gaining share in pretty much all of the channels given the -- all of the channels and all of the tiers, given the innovations that we were able to put into the market. And again, those have to do with better observancy core, better fit, better stretch, better softness. So depending on the tier, again, we improved every single one of them, and that's a category where we see our shares improving nicely. Also, for example, in bathroom tissue in the premium tier, where we've introduced a couple of new features and new sub-brands under Kleenex,

Cottonelle, and we're absolutely convinced we have the best product in market and products that can compete with products anywhere in the world. and they've been very, very well received by consumers. And as well, we also made some innovations to our economic product, particularly Vogue in the -- or [ Vogue ] in the wholesale channel, and we've been able to gain ground with that product consistently and significantly. So again, innovation at the core of everything we do and very, very excited with what we see for the coming years when it comes to innovation. With respect to the breakdown of our exports, I mean, hard roll sales represent 46% of the sales and finished product, 54%. And hard rolls, as I mentioned, hopefully, volumes will stabilize here in the coming quarters, and we expect that to continue to be -- hopefully, be a tailwind and if not, certainly not a headwind going forward. And on the finished product, we're excited. I mean we've had a couple of meetings with our partner, and we're looking at opportunities in the coming years to further integrate our supply chain. We've done a good job here in the past couple of years, but many more things that we can do, and we're working very closely together to make that happen, and we're excited with the opportunities we see for it. And as we move and are able to turn more of our capacity into finished product, then certainly, our hard roll sales will decline accordingly because, as you know, what we do is our excess capacity is what we turn into hard rolled sales and sell outside. So as this plans with our partner materialize, a little by little, we'll start to see lower hard roll sales, but finished product sales increase hopefully significantly.

And that was actually the idea behind the question on capacity utilization is we agree. We see this massive opportunity in exports of finished product. And as a result, we're a little curious in terms of where you are right now in terms of capacity utilization, both for pulp? And then how should we think about where you are today on finished product and we can make some estimates in terms of what you need to add.

Yes. And it's a great question, Bob, and we -- let me put it this way. We have enough capacity to grow on finished products aggressively together with our partner in the coming years. And not only what we're producing right now, but we're putting plans together so that we can get more throughput through our equipment or through our machines. So we will be able to support growth with them. And I think we will still continue to be able to put a decent amount of hard roll sales out there in the U.S. So I think the combination over the coming years will certainly be a support our growth and support our margins going forward.

Our next question comes from Alejandro Fuchs with Itau.

I have 2 very quick ones. Pablo, maybe I want to see if you can discuss a little bit about competition, right? How do you see competition today in Mexico, given the increase in price and sales mix, are maybe the competitors following? Are they being more aggressive promotionally? And if you can also discuss maybe your expectations into next year, hopefully, with a better consumer environment in the country. Maybe you can talk us about what do you expect going forward?

Sure, Alejandro. Look, when it comes to competition, I mean, you know our categories have always been very competitive. And we maybe are seeing a little bit more from some participants, not all when it comes to their promotional aggressiveness. I wouldn't say it's something that it's radically different, but a little bit more as, again, the pie is not growing, some are losing share. So they're trying to recoup some of that and are being a little bit more aggressive on it. But not -- again, not something that it's too surprising or too different from other instances. And the fact also that our retailers are, one, continuing to keep inventories and overall working capital under control, they're putting a lot of pressure on that. And two, trying to keep prices, it seems to me a little bit more consistent. I mean that helps in terms of the aggressiveness of promotions not being even more so that it could have been in other instances when the economy is not growing. So a little bit more, but really nothing marked, if you will. Coming into next year, I mean, we hope that a lot of the -- or at least some of the uncertainty that is hanging over the economy can be resolved or at least we get a clear direction as to where it's going. Certainly, the uncertainty that's coming from the USMCA revision or renegotiation and what will happen with that. I mean, you've heard -- we've heard that in a couple of weeks, we'll be hearing from our government as to some of the agreements they've come to with the U.S. administration. So hopefully, that will start to settle down, and we'll know a little bit better where it heads. Hopefully, as we get into the first -- or the workings of the judicial reform, we start to see how it how it works, and we start to see some decisions that support, again, giving more certainty to investment. And again, just hopefully, some of this uncertainties start to play out and we start to get a better sense of what's going on. We know then what to expect. And if that happens, I think the economy will be able to start growing again at a faster clip, maybe come back to what we were doing before all of this uncertainty, about a 1.5%, 2% rate, which at this stands would be pretty good. Not what we need certainly as a country. I mean, we really should be working hard to take all of the obstacles away from investments so that we can start growing at 3% or higher rates, but that's going to take some time and uncertainty is key for that certainty. So that will hopefully play out by '27, but at least by '26, if we can get some uncertainty out, we'll see greater economic growth and then we might see a consumer that feels a little bit better about things and then domestic consumption can start to pick up again. That's our expectation. But let's see how quickly we can -- how quickly it unravels and happens.

Our next question comes from Renata Cabral with Citibank.

Congrats on the results. So my first question is still about the consumption environment, but specifically to understand if consumers are making the trade downs and if you see a bigger penetration of private label in the categories that the company has? And the second question is related to cost. In the initial remarks, I understood that the company expects that the raw material prices should maintain for the upcoming months. I would like just to confirm if that's the view. And for the fourth quarter, if the company has any hedges or the effects?

I hope I can answer your questions. You were not coming through too clearly, but if I don't, please let me know. Again, when it comes to consumers, we're seeing a divergence. Those that buy premium products continue to do so. Those consumers that are used to buy either value or economy products, we see a little bit of trade down to the economy segment. not a big trade down, but a little bit of trade down given how stretched they are. And tied to that, we are also seeing growth in penetration of private labels in the country. And it's a combination of the economic situation and retailers being a little bit more aggressive when it comes to pushing their private label. When it comes to costs, again, we already have seen in our purchases lower costs of most of our raw materials, excluding fluff. And that's just taking a little bit of time to reflect on our cost of goods sold, but we expect that to continue to -- start to happen certainly in the fourth quarter. And no doubt early in 2026. And our expectations for costs in the 2026 is that we will come in with, again, most of them on a downward trend and that will certainly be tailwinds for our cost together with the exchange rate, which will compare very favorably in the first half of the year. So that should be very, very helpful going forward. And when it comes to hedges, no, we have no more hedges during this quarter, and we don't expect to hedge going forward.

We will move next with Antonio Hernandez with Actinver.

Just following up on [ Renata's ] question, should we expect given that because of the tailwinds from FX and maybe raw materials and so on, that maybe EBITDA margin, at least in the short term has already hit rock bottom. Is that like you see basically upside on going forward?

Yes, absolutely. And it's interesting how you put it rock bottom when it's 25%, and it's still one of the best EBITDA margins out there for any Consumer Products company in the world. But yes, we probably have hit rock bottom. And going forward, we should expect better margins, no doubt.

Exactly. Yes. I mean, rock bottom considering the 25% to 27%.

I understand. I just -- quite frankly, I just used it to make a point, sorry.

Exactly. It's all relative in the end, but yes, pretty good margins. Just a quick follow-up. In terms of innovation and how you're also treating these consumers that are willing to buy these premium products. Maybe if you could provide any color on how much do they represent or innovation in terms of sales? Anything like that would be helpful.

Look, I think most of our growth really is coming from products that -- where we've innovated. And again, we're very, very excited with what we've done, but even more so with what we have coming. And early in 2026, we hope to share a little bit more of our strategies when it comes to areas -- main areas of focus and opportunities by category, channel and brands and also the -- what we see would be some of the very exciting innovations that we're going to be putting into the market. So let's hold on that until the first quarter of '26, and we'll be able to provide you more insight and details into what it's done and how we expect it to contribute to our growth going forward.

[Operator Instructions] We will move next with Jeronimo de Guzman with INCA Investments.

Start with a follow-up on the cost side. You mentioned that there's no hedges impacting the fourth quarter, but I just wanted to understand how much did the FX hedges impact the third quarter?

I would probably say they did impact about 50% of our purchases for the second quarter and for the first part of the third quarter. So assuming that what we saw on the third quarter was mostly based on those purchases. You could say that approximately 50% of our dollar-denominated purchases were impacted by those hedges in the quarter. I don't know if that made sense.

But only half -- but only for half of the third quarter...

Yes, because of the -- no, I would say for the full quarter, about 50% of our U.S. dollar purchases, which are about 50% of our costs were hedged.

Got it. Okay. And what was the average FX for those hedges?

[ 20 70 ] something.

That will be a big improvement. And then just want to understand, given the much better cost outlook and the fact that these hedges are less of a headwind going forward or not a headwind going forward, how are you thinking about pricing going forward?

Look, we continue to take a very close look at each category and each tier and each channel to see where there are opportunities for pricing because, yes, we see tailwinds when it comes to costs of raw materials. We see headwinds in other costs, for example, on labor costs, which have been increasing in Mexico for quite some years. And when you compound their impact over the years, it's becoming a little bit more impactful, if you will, and some other issues. And plus we want to continue to generate important margins and profit so that we can further invest behind our brands. So pricing will not be as maybe in the past where you would just [indiscernible] we're going to increase 4% in the diaper category in March and period. It's going to be more of a strategic analysis, again by tier, by channel, et cetera, to determine where the opportunities are together with a very important push behind mix for our brands given the innovation we have. And so we will continue to look for opportunities to price and opportunities to improve our mix going forward.

Okay. Yes, that's helpful. So the 4% that you had this quarter year-on-year, how much of that was mix versus actual price changes? Or was it just less promotions versus a year ago, I guess, which is kind of a...

It was about half and half. It was about 2% price, 2% mix.

Okay. Got it. Great. And just one other question on the competitive environment. I wanted to get your sense on market share trends in general, kind of where -- in what areas are you seeing maybe more pressure on the market share side and where you're seeing more more of the market share gains that you're having?

Overall, I think we have a very stable market shares, maybe except on diapers, as I mentioned, we see that share growing. When you take a look at bathroom tissue, we're fairly stable. Napkins, we're growing share. kitchen towels, we're growing share. Wipes, we're growing a little bit on value, not on volume. But that's a category where we have lost a little bit of ground to not only private label, but a whole bunch of offerings coming from Asia and other parts of the world at very cheap prices. So we've got plans to attack there and recoup some of the share. And I would say about that, I mean, facial tissue is is flat at about 92%. I mean, our shares are pretty stable overall.

Okay. Sorry, one more question on the new JV, the penetration, any updates on that?

On what, sorry?

The new business, the pet, animal [indiscernible]

Pet business. No, thanks for the question. Yes, we continue to make inroads. I mean we're getting cataloged in more retail chains and improving our reach within them. So getting more SKUs in there and getting into more stores. And again, the consumer reaction so far has been very, very good. The retail reaction has also been good. So right on track where we wanted to be, and hopefully, that will accelerate in 2026. Again, this is a long-term play, but we should be this -- we absolutely should see this business accelerate in 2026.

We will move next with [ Miguel Ulloa ] with BBVA.

It could be regarding the CapEx for next year and any changes in the repurchase program.

Miguel, CapEx will remain very likely in the $120 million range. Could be a little bit more if some of the opportunities for exports capitalize, but nothing that would change significantly the capital allocation. For buybacks, this year, we will complete our EUR 1.5 billion program. Still too early to talk about next year. We will definitely have retained earnings from the net income this year to grow the dividend. And as usual, whatever we have left, we will devote to to buybacks. So that we'll have to see after we end the year.

That's helpful. And just one, if I may, is regarding further investments or big investments in line for capacity in coming years?

Right now, it doesn't look like we need to do anything beyond that 120 average CapEx. Again, if we see more opportunity, we could see a couple of years of ramp-up. And even if at some point, we need a tissue capacity, which at this point, it doesn't look like, but hopefully, that changes, then we would see a couple of years of 150, maybe somewhere around that. Again, nothing that should change significantly the capital allocation.

And this concludes our Q&A session. I will now turn the call over to Pablo González closing remarks.

Thank you. Nothing else to say just thanks for participating in the call. I hope you all have a terrific weekend. And since this is our last call before the year-end, I know it's early, but I hope you all have happy holidays and a terrific New Year's and look forward to talking to you early in 2026. Thank you.

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.