Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to CEO Pablo González. Please go ahead.
Thanks so much, Nikki. Good morning, everyone. 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. We continue to make progress on our KCM Plus 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 mixed growth, while away from home decreased 1.3%. Exports were down 6.8% due to lower hard roll 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 non-woven 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, super absorbent materials, and resins compared favorably. The FX was also lower, averaging around 15% less than last year. Sorry. Gross profit increased 11.1%, and margin was 31%. 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 continued 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 had been paid from cash, we issued Certificados Bursátiles for MXN 10 billion through two 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 31st was MXN 20.4 billion. Our net debt to EBITDA ratio was 0.9 x, with EBITDA to net interest coverage of 9x . With that, I turn it back 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 will continue to apply our revenue growth management capabilities. 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 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'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 Plus 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.
Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star and one to ask a question. We will pause for a moment to allow everyone a chance to join the queue. We'll take our first question from Ben Theurer with Barclays. Please go ahead. Your line is open.
Yeah, good morning, Pablo, Xavier, good morning. Thank you very much for taking my question. Two quick ones. First, if I remember right, about a year ago, the strategy over summer in terms of campaigning, promotions, you took a little bit more of a hands-off approach, a little bit more on the back burner, not as aggressive as in prior years. 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 pretty much has already started here in mid-April. It might have to do with the World Cup and all of the retailers wanting to get ahead of that event. We're starting to see more promotion out there. In our case, we continue to be more disciplined about it to ensure we can keep the value of our categories.
Okay. A quick follow-up on the commodity cost side, because I kind of missed the commentary, because obviously you do have some exposure to oil price derivative products. Just wanted to understand how the current surge in oil prices is affecting you on what might be more of like, call it a PET exposed or just oil derivative exposed raw material cost pressure.
Yeah, we are seeing some pressure on oil derivatives. So far, and given where things stand, we believe it will be limited both in strength and duration. That's where it stands right now. As it is, it would have some impact, of course, on our costs and our margins, but we don't think it'll be significant. Now, things can change, of course, but where it stands right now, again, limited in both strength and duration.
Perfect. Thank you very much. I'll pass it on.
Thank you.
Thank you. Our next question comes from Robert Ford with Bank of America. Please go ahead. Your line is open.
Thank you, and good morning, everybody. Pablo, can you comment a little bit about how clients and competitors are responding to your 4% price hike? When it comes to the North American production footprint with Kimberly-Clark Corporation, how should we think about the magnitude of the opportunity as well as the economics of that? Is there a role for you in the very short term to help address the inventory loss that Kimberly-Clark Corp. Suffered in California? Then lastly, how are you thinking about Kenvue Mexico with respect to the final deal terms and the closing date? Thank you.
Sure. Thank you, Bob, for the questions. First, on retailers and competitors responding to our price increases. 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. 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 going forward.
When it comes to the U.S., 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. 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. 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. Again, we're starting with a couple of projects, 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. In the short term, we'll be helping with that. Then when it comes to Kenvue, we're in the process of the due diligence of the business and with starting our discussions with our partner on the business. As you know, they're moving forward 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. Things are looking good.
Great to hear. Thank you so much.
Thank you.
Thank you. We'll take our next question from Renata Cabral with Citigroup. Please go ahead. Your line is open.
Hi, everyone. Thank you so much for taking my question, and congrats on the results. My first question is related to costs, and I'll follow up, actually. Considering the current level of the effects, it's natural we consider that those margin improvements can carry over along the year. 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. The number two is related to the consumer division that had a growth of 5%. We see this 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 so much.
Thank you, Renata. Well, first on the cost side, yeah, you're right. The FX will continue to be a tailwind. Again, if raw materials were driven at this moment by fundamentals, we would continue to see improvements, and that would also be a tailwind. Again, we're experiencing this uncertainty right now with the oil shock and the impact that that's having on all derivative commodities. 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, it still feels, as I mentioned, the economy is still stagnated.
We are not seeing great growth. Domestic consumption is still pretty subdued. We continue to see the same dynamics in our categories as we saw second half of last year. 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. No changes really there on the dynamic on the categories. 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. 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.
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 three quarters sequentially in consumer products, and we hope we can get that to continue.
That's very helpful. Thank you so much for the update.
Thank you, Renata.
Thank you. We will move next with Alejandro Fuchs with Itaú. Please go ahead. Your line is open.
Thank you, operator. Hello, Pablo, Xavier, and team. Thank you for the space for questions, and 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 KCM in the U.S. in the second half of the year, maybe. Thank you.
Hello, 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 pre-finance, let me use that word, two or three years ahead. The last two 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 pre-financed for that. I hope that answers it.
Super clear. Thank you very much.
You're welcome.
Thank you. Once again, if you would like to ask a question, please press star one on your keypad now. We will take our next question from Antonio Hernández with Actinver. Please go ahead. Your line is open.
Hi. Good morning. Thanks for taking our first move 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 on overall improvement, maybe how you started the quarter versus how you ended the quarter? Thanks.
Thanks for the question, Antonio. Look, away from home was lower versus last year, but it did have an important sequential improvement. We see the business started to improve. As I mentioned in prior calls, this is a business that suffered more the effects of the slowdown of the economy and the adjustment to inventories by the trade. We continue to see some of that, but again, our volumes are starting to improve sequentially. We believe 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. It's had a little bit of a rough patch, but I think it's coming under control and the right trend. Again, second half, we should be growing the business nicely.
Okay. Thanks for the call.
Thank you, Antonio.
Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Pablo González for closing comments.
Well, nothing more to say, just thanks so much for participating in the call. We really, really appreciate it. 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. 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, Nikki.