Good morning, and welcome to Grupo Rotoplas' fourth quarter 2018 results conference call. Please note that today's call is being recorded, and all participants are currently in listen-only mode to prevent background noise. The host will open the floor for questions later. Today's discussion contains forward-looking statements. These statements are based on the environment as we currently see it, and as such, there may be certain risks and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the Investors section of its website.
The presentation for the call and the webcast link are in the Investors section. Today's call will be hosted by Mr. Carlos Rojas, Rotoplas' Chairman and Chief Executive Officer, and Mr. Mario Romero, Chief Financial Officer. I will now turn the call over to Mr. Carlos Rojas.
Thank you, operator. Thank you all for joining us today. As you know, yesterday, we reported double-digit growth in sales and EBITDA year-over-year in both the fourth quarter and 2018 as a whole. All of our country operations grew except for Brazil, where, as you know, we are reducing government sales and transitioning our focus on products mixed onwards to premium segments. This growth was driven by our acquisitions, increased demand for our products such as storage and flow solutions and our water-as-a-service platform. In fact, in 2018 alone, we added over 4,700 purification points, another 1,800 water fountains exceeding our expectations. The fact that we grew across the board is very significant for a number of reasons. First of all, as we have discussed in previous calls, some of our Latin America operations experienced significant political, fiscal, and economical uncertainty during these past few months.
As was, for example, the case in Argentina, where hyperinflation continued to have a significant impact in our overall results. Yet, not only we did manage to grow in the environment, but we did so while consolidating a more diversified portfolio of products and services, maintaining and expanding our market share. In this context, it is worth noting that the re-open of our sustainable bond, AGUA 17-2X, for MXN 1,000 million was oversubscribed several times, paving the way for greater capital investments in our service platform. It is significant as well that our recent acquisition not only contribute to our sales growth, but they also provide us with synergies, technology, and institutional knowledge that we can leverage as we move forward, and that, eventually, will enable us to fully realize the water market potential in the region.
Finally, it is significant that as we grow, we also continue to develop a strong ESG culture, pushing forward initiatives in sustainable finance, but also strengthening our corporate governance and promoting access to water through better products and services. We are convinced that this is the only way forward for companies such as ours. Thankfully, as we talk about in our previous calls, we are being recognized for it. We continue to be included in the Dow Jones Sustainability MILA Pacific Alliance Index, which tracks best-in-class companies that outperform their peers in sustainability. Moreover, we continue to improve in the Corporate Sustainability Assessment produced by RobecoSAM, the leading sustainability evaluation firm. We continue to consolidate a robust and diversified portfolio, both organically and inorganically.
We do so with the aim of providing even more innovative solutions for a market that is growing and evolving constantly and which we have deep and well-established leadership position. We will continue to integrate our acquisition according to the strategy, grow our business, and create value for our stakeholders and communities. Thank you for listening. I would now like to turn over the call to Mario, who will guide you through the quarterly and key results and look forward to your questions.
Thank you, Carlos. Good morning, everyone. Thank you for joining us today. I will now go over some of the financial highlights of the fourth quarter and the year. Sales grew 26% year-over-year this quarter and 18% year-to-date, with a major contribution from IPS in Argentina and the e-commerce platform in the U.S. EBITDA grew 57% year-over-year in the third quarter and 25% in 2018. Furthermore, we increased profitability margins, obtaining greater efficiencies in our operations by means of better pricing, lower raw material costs, and a constant expense discipline and cost control initiatives such as zero-based budgeting. As for our geographic breakdown, sales in Mexico grew 8% year-over-year in the third quarter, accounting for 54% of our total sales. Our operations in Argentina grew 45% in local currency, excluding the recent acquisition of IPS.
Even though this growth was offset in MXN due to the ARS peso depreciation, reducing the group's growth by four full percentage points. Other countries totality, which includes our operations in the U.S., Brazil, Peru, and Central America, grew 4% year-over-year. Regarding our annual results, sales in Mexico grew 6.5% in 2018, boosted by greater sales of water flow products and purification services, evidencing our leadership position in the market and the success of our diversification strategy. The other sales grew 29% in 2018, driven by the growth of our operations in the U.S. and Central America. Sales in Argentina grew 55%, driven by the successful integration of IPS and improved price mix in our organic operations.
As was the case for the fourth quarter, inflation rate had a positive effect on our yearly growth, but it was offset by the depreciation of the Argentine peso. To give you more color on the integration of IPS, this provides a powerful export platform in South America, and it also contributes significant growth in volume and sales. In fact, the volume of exports from Argentina grew 42% in 2018, offsetting the slowdown given by the depreciation of the Argentine peso. Despite a different development in the purchase price, the acquisition continues to grow in sales and volume, and the exports platform, market leadership, and new product development will accelerate into 2018. This slide is good to point out that the intrinsic value of the company is great, and immediate synergies are still pending to happen.
Likewise, the integration of the e-commerce platform in the U.S. is already boosting the growth of our organic operation in that country. Regarding our product mix, sales of individual solutions or products in the fourth quarter accounted for 93% of total sales and grew 33% year-over-year in the quarter and 21% for the year as a total. Boosted by the integration of IPS, the growth of our organic businesses, and the operations in the U.S. For their part, integrated solutions or services accounted for 7% of total sales and registered a 24% decrease year-over-year in the fourth quarter, which is mostly attributable to a decrease in sales of self-sustaining solutions that are mainly associated with the government channel, such as rural rainwater harvesting, the [Alga composting bathroom], and the primary agricultural irrigation system.
Sales of services were down 5% for the year, mostly due to the third quarter results. Nevertheless, we continue the expansion and strengthening of our water-as-a-service platform. For example, it's good to point out that our water purification platform now is serving 39 cities in Mexico in line with our projections and plans. As for the water treatment plants and the reason behind the reopening of the sustainable bond, and after undertaking our learning curve throughout 2018, we are observing good traction in 2018, and we think that it will continue in 2019. During this time, we added new clients and booked 87 new recurring units throughout 2018, while continuing to exponentially grow the pipeline and the client base. It should be noted, however, that our net income was affected by three factors.
First, higher interest payments amounting to a net of MXN 192 million due to a positive net debt position. Second, the monetary position loss in Argentina amounting to MXN 64 million. Third, taxes amounting to MXN 22 million. Normalized net income without considering the Argentine effect or monetary loss and taxes would have been of MXN 465 million. The Argentine effect eroded more than 100 basis points from our net margin. The fact that our acquisitions contribute significantly to our results, combined with organic growth of our businesses and the positive outlook for our water-as-a-service platform, this updates and reaffirms our positive long-term outlook and validates our current growth strategy. As Carlos said, we remain committed to customer centricity and ESG principles, while maintaining a strong balance sheet and a positive debt outlook.
We are also confident that we will keep net debt below two times EBITDA, in line with our current one and a half times EBITDA leverage. We'll use the balance to fund CapEx for our water-as-a-service platform. Going forward, we're expecting we will achieve for this year sales growth greater than 10%, and that EBITDA margin will stand above 16%. I would like to have the opportunity to answer any questions you may have. We will begin with participants in the conference call, followed by our website users.
Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're on speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. At this time, we will go to a question from José Rivera of Actinver.
Hi, Carlos and Mario. Congrats on the results. I have one question. Before the question, I just want to be sure that the Brazilian sales decline in BRL is due to the strategy of focusing on higher profitable products. The question would be, we have seen positive results in the e-commerce platform in the U.S. market. I was wondering when we are going to see this level of implementation, in Mexico.
Thanks, José, for joining the conference call today. As for the Brazil question, if you remember back in 2017, we had to initiate some of the rainwater harvesting programs, we compiled it, we executed. That was not the case for 2018, particularly in the second half. That is why you see a slowdown in Brazil. If you look at the retail water tank business in Brazil, that is growing, and we're just managing in a small scale. As for the e-commerce platform, as we explained previously to the market, the U.S., which is the most developed market, we are understanding the space. We are understanding what will be the capitalization into the other countries where we operate. We've been starting to do some pilot testing in some countries in South America.
We believe as e-commerce becomes a greater distribution channel, as has happened in the U.S., being ahead of the curve will help us in doing what we needed in Mexico.
Thank you very much.
As a reminder, it is star one if you have a question at this time on the telephone. You may press star one for questions on the phone. We'll pause another moment.
I have a question in the webcast from Liliana De Leon from GBM. Could you please share with us more details regarding the growth of water treatment plants during 2018 and going forward?
Thanks, Liliana, for joining us today. As we present during the webcast, what we're seeing is, as time passes by and we understand better the market, and we've been educating as well the clients, better traction on demand of interest and water treatment plants in the marketplace. As you can see, the pipeline in 2017, we started the year with 25. We booked and executed 15. In 2018, the pipeline was 124. We booked 87. Some of them are still in construction and will start to reflect on revenue and EBITDA recording throughout 2019. The important thing here is, in 2019, we are beginning the year with a pipeline of 417, which is 2.5 times last year, and it's like 15 times two years ago.
You can see, moving from only having six clients in 2017 moving to 16 clients in 2019. We believe that the business that we have shared with you and the long-term goal of achieving 5,000 water treatment plants is feasible. We are confident that those results will be achieved.
I have another question from GBM, Liliana De Leon. Regarding 2019, you are expecting a growth in all the regions above 10% or some countries should be above/below the target?
I would say, Liliana, that most of the countries will grow above that target rate. At this point, we are not giving those details. We feel confident that at least that number will be achieved, as you hope.
We have another question from Jerónimo Cobián from Actinver. We see an upward trend for the majority of the main raw materials. I understand that you make significant hedges for the raw materials price. Could you please share with us more information about this?
Hello, Jerónimo. A couple of things. The hedge that the company does is the FX exposure in US dollars, and we do hedge our cost, but only the FX exposure, not the raw material exposure. As for the raw materials future outlook, we are seeing more export capacity in the petrochemical side and more supply than demand. We see a 2019 stable environment regarding raw material costs.
The last question from Claudio at Bradesco, I think it's pretty much the same as the other one about Pipesa. Hello, thank you for the call. Could you give us an update on Pipesa openings for 2018 and 2019?
Well, I guess the 2018 is already reported here. 2019, what we were just trying to sign out is that the amount of pipeline that there is out there, and obviously, how many we're going to be booking depends on how good we are on executing that. I think that our track record speaks well about our commercial and technological capabilities. We're about 50% hit ratio on 2017 and 2018. I think that will help out to make your numbers for 2019.
Jenny, could you please open the line again for questions just to see if we have one on the phone?
As a reminder, it is star one if you have a question on the phone line at this time. That is star one for questions. We'll pause a moment. At this point, there are no other questions in the queue.
Thank you very much, all, for joining us today. See you soon again. Talk to you soon again in the next report. Thank you.
Yeah, thank you very much for your time and your interest. We hope you will join us again next quarter. Until then, we'll be sure to provide you with important updates.
Again, ladies and gentlemen, that does conclude today's call. We would like to thank everyone for your participation. You may now disconnect.