Ladies and gentlemen, thank you for standing by. I would like to welcome you to Alicorp's second quarter 2023 results conference call on the first of August, 2023. At this time, all participant lines are on listen only mode. The format of the call today will be a presentation by the management and IR team, followed by a question and answer session. Without further ado, I would now like to pass the line to Mr. Manuel. Please go ahead, sir.
Good morning, everyone. Welcome, and thanks for joining us today. I would like to start this call introducing Misael Alvarez, who has recently been appointed as Director of Strategy, Portfolio, and IRO at Alicorp. Misael has a notable professional career with 10 years of experience in M&A and approximately four years with us, in which he has led the mergers and acquisitions and portfolio management in our finance and transformation vice presidents, vice presidency. Misael, please go ahead.
Thank you, Manuel, good morning, everyone. We are pleased that you could join us today. As presenters today, we will have Mr. Alfredo Perez, Chief Executive Officer, Mr. Manuel Romero, Chief Financial Officer, Mr. Alvaro Rojas, Vice President of Marketing Consumer Goods Peru, and COE of Marketing Consumer Goods Peru, and other members of the senior management team, who will join us during the Q&A session. Today, we'll be discussing the second quarter 2023 results after the financial results and earnings reports were issued on Monday. If you have not received a copy of the earnings report, please visit us at www.alicorp.com.pe, where you will also find the webcast presentation to accompany our discussion during this call. Please be advised that today's call is for investors and analysts only. Therefore, questions from media will not be taken.
If you are a member of the media and wish to direct any questions to our company, please contact our team directly after the call. Before we begin, I would like to remind you that forward-looking statements may be made during this conference call. These forward-looking statements are based on several assumptions and factors that could change, causing actual reports to materially differ from current expectations. We ask that you refer to the disclaimer located in the earnings release prior to making an investment decision. It is now my pleasure to turn the call over to Mr. Alfredo Perez, Chief Executive Officer of Alicorp, who will begin the presentation. Alfredo, please go ahead.
Good morning, everyone. Thank you for joining Alicorp's second quarter 2023 earnings call today. In today's call, we will discuss the second quarter of 2023 results. I would like to start by giving you an overview of the most important events that have taken place over the last months, followed by an update on key performance indicators. Then, we will cover the potential related party transaction of Refinería del Espino. Moving on, we'll go through our consolidated results. Alvaro Manuel will afterwards cover our financial results by business units. And at the end, before the Q&A session, I will take the floor again for an update on our guidance for this year. Now, let's begin on slide 5 to fill you in some recent events.
First, on Friday, July 7th, we were notified by BTG Pactual's Peru stockbroker that Inversiones Piuranas, our current shareholder and one of the investment arms of the Romero Group, launched a public tender offer for 9.5% of Alicorp's outstanding voting shares. The tender offer started on July 10th and will run until August 7th. It is important to mention that according to local regulation, treasury stock bought during the buyback program last year cannot be traded in the tender offer. Following the announcement, our stock price rallied, reaching an 11% increase. As issuers, and given the nature of the operation, we are maintaining a neutral role. Second, Peru's annual general inflation rate reached 6.7% as of June 2023, its lowest levels in March 2022, while the food and beverage component reached 12.9%.
Despite the relative improvement, consumer confidence remains under a pessimistic threshold as the purchasing power of consumers continue to be heavily affected. Third, although we're seeing that inflation rates are decreasing, households' disposable income has not increased at the same pace as inflation, causing families to prioritize their expenses. Since 2019, private real income has experienced a decrease of 5.3%, with a larger impact for less fortunate families that spend proportionately more in food and beverages, where inflation has been higher. Additionally, Peruvian economy is still facing strong headwinds, as accumulated GDP growth reached a -0.49% as of May 2023. As a result, we're seeing volume market contractions in several key categories where we are leaders.
Overall, the current environment presents not only economic and market challenges, but high chances of climate-related events such as El Niño phenomenon in the second half of this year and the first half of 2024. We're carefully addressing the risk through a company-wide project with a centralized governance model. We're evaluating the potential impacts and designing action plans for each strategic front. Finally, it is worth mentioning that transit restrictions at the Desaguadero were progressively lifted since late March, allowing normalized international trade between Peru and Bolivia. Let's move on to slide 6 to discuss the key performance indicators. Despite the challenging outlook that we have been facing over the last few years, we continue implementing corporate initiatives that are helping us to address this context.
Over the past six months, we have begun an in-depth review of our consumer goods business, aligned with our strategic focus within our categories, tiers, and channels. As a result, we are reviewing our gross net investments, strengthening our revenue growth management capabilities, rebalancing our profitability of value products, and optimizing demand planning and manufacturing processes to reduce inefficiencies in our supply chain. Some of these value levers are already showing positive results in terms of profitability for the first time since the pandemic hit. Our gross net profit per metric ton has outperformed pre-pandemic levels. This is a result of more disciplined pricing and gross to net, ensuring that our profitability levels across all categories, tiers, and channels, is sufficient to generate healthy returns on invested capital. This strategic focus is helping us allocate resources more effectively and deprioritize SKUs or volume that was destroying value.
Regarding our SG&A management, we're still above pre-pandemic levels. Since 2021, our depreciation has increased significantly, following our S/4HANA implementation. Nevertheless, we continue working on our efficiency programs, hoping to moderate our expense growth in order to recover past ratios. It is also important to mention that our SG&A to gross profit ratio was impacted by one-off expenses in the second quarter of 2023, such as the optimization of production facilities and the organizational restructuring that followed. Now, let's move on to slide 7 to discuss the rationale of the potential related party transaction with Refinería del Espino. In addition to the announcement of the tender offer made by Inversiones Piuranas, it was also that Alicorp is evaluating the purchase of Refinería del Espino, dedicated to the production and distribution of edible oils, shortenings, laundry soaps, and other fat-related products.
The potential acquisition will strengthen our leadership in the edible oils and shortening categories, especially in the eastern region of Peru, as well as capturing relevant synergies for our value portfolio via an increase in the use of palm in our value products, enhancing our competitiveness, and increasing our profitability in this segment that continues gaining relevance due to the economic situation in Peru. It is important to mention that the potential acquisition mainly includes the downstream business, leaving the agri business operations under the Romero Group management. Alicorp will sign a supply agreement that ensures access to raw materials to operate the refinery located in the eastern region.
Lastly, since Alicorp and Refinería del Espino are part of the Romero Group, a special non-related committee has been established, composed by four board members of Alicorp, who will be responsible for the evaluation in the and the eventual approval of the transaction. This special committee has chosen JP Morgan as the external entity that will advise them, as well as prepare the evaluation and analysis report. It is worth mentioning that the deal structure is quite similar to 2018's acquisition of Fino by Alicorp, which was also a related company. Now, let's discuss our consolidated results for the second quarter of 2023 on slide 9. Consolidated revenue reached PEN 3.4 billion, exceeding a 4% year-over-year decrease, which is mainly explained by a 41% contraction of our crushing business.
Excluding this business, revenue decreased 6% year-over-year, mainly explained by consumer goods Peru and B2B. This is mainly due to the market contractions given the current economic environment and our portfolio optimization strategy. In the case of consumer goods Peru, most of the value loss is in the value segment. However, when analyzing our revenue per metric ton, we see a 3% increase, which we see as positive early results of the initiatives we are implementing, which include strategic focus on core tier products and brands, and price action executing during the quarter. Now, let's review our consolidated gross profit for the second quarter of 2023 on slide number 10. Consolidated gross profit increased 11% year-over-year due to the performance of our crushing business, which experienced lower volume and crush margins.
Excluding the crushing business, gross profit increased 2%, driven by consumer goods Peru, B2B, and aquafeed businesses, partially offset by consumer goods international. It is important to mention that excluding the crushing business, both gross profit per ton and gross margin increased 11% and 1.5 percentage points year-over-year, respectively, reflecting our efforts of portfolio optimization and focus on recovering volumes and market share of our tier one brands. Let's now review our consolidated EBITDA for second quarter 2023 on slide 11. Consolidated EBITDA reached PEN 297 million, a 30% year-over-year decrease explained by the result of our crushing business and higher SG&A expenses in the consumer segments.
The increase in SG&A is mainly explained by restructuring expenses, optimization of production facilities, and advertising initiatives to fuel future growth. The crushing business accounts for 70%, 76%, I'm sorry, of the total decrease in consolidated EBITDA for the quarter. Excluding the business, EBITDA decreased 9% year-over-year. Let's now review our consolidated net income for the second quarter, 2023, on slide number 12. Consolidated net income decreased 38%, dropping from PEN 142 million soles in the second quarter of 2022 to PEN 89 million soles in the same period of 2023. The decline is mainly attributed to a lower operating profit, driven by the performance of our crushing business. This was partially offset by the positive effect of FX. Year-to-date, net income reached PEN 95 million soles, a 69% decrease compared to the same period of 2022.
Let me pass the floor over to Alvaro, who will discuss the operating results of our consumer goods Peru business.
I think Alvaro is having troubles connecting, I'm going to cover him until he can join. Thank you, Alfredo. Let's begin with an update on CPG market dynamics on slide 14. We will discuss the recent economic developments in Peru and the performance of our company within this. Did Alvaro join?
Yes. Can you guys hear me?
Okay. Yeah.
Sorry about that. Technical difficulties. Thank you, Alfredo, and thank you, thank you, Manuel. Let's begin with an update on our CPG market dynamics on slide 14. We will discuss the recent economic developments in Peru and the performance of our company within this context. Despite the improvements observed during the second quarter, it is crucial to emphasize that Peru's economic landscape continues to face significant challenges, notably compounded by the reduction in consumer purchasing power throughout 2023. The GDP, which contracted by 0.4% in the first quarter of 2023, compared to the same period last year, is expected to decline by 0.1% in the second quarter. Although this estimation shows a lower decrease, we are still facing a contraction in the Peruvian economy.
Regarding private consumption, it's estimated to grow 0.7% in the first quarter of 2023 to 1% in the second quarter. This economic situation is also reflected in the market declines we have seen in the year to date 2023, and the same period of 2022 in several key categories, such as edible oils, which decreases 7.1%, pastas, decreases 5.1%, detergents, 2.3%, among others. Despite these difficulties, our growth in revenue per metric ton has outperformed the GDP and private consumption growth rates. Additionally, we have actively encouraged sales in our traditional channel, where we have competitive advantages due to our go-to-market capabilities.
In May, we designed and started to implement a new business plan that shows encouraging early results. The second quarter of 2023, we can already see that our sales mix in the core segment increased from 70% in the first quarter of 2023 to 73%. The presence of our core products in the traditional channel increased one percentage point compared to the first quarter of 2023, an effect that should continue to evolve more significantly in the upcoming months. We have a carryover effect due to the pricing actions taken earlier this year. It is important to highlight that although these price actions led to lower volumes sold, we have managed to increase our gross profit compared to last year. Our priority is to focus on the market segments that generate more value, and in those segments, drive our core brands' share growth.
We see early results, promising results in categories like edible oils, cookies, and detergents, with 0.7, 0.8, and 3.9 percentage points growth, respectively, in the core brands market segment. Let's move over to the financial performance of our consumer goods Peru unit on slide 15. On a year-to-date basis, our sales experienced a 4% decrease compared to 2022. This decline is mainly explained by volume contractions in the Peruvian consumer markets and our conscious and strategic focus on core brands, reprioritizing resources away from lower-tier brands. The decrease in sales volume.
Sorry, I, I think we lost Alvaro again, so I'm going to cover him. Despite the decrease in sales volume and the market challenges, our year-to-date gross profit in 2023 increased PEN 14 million compared to last year. This is explained mainly due to the 20% increase in our gross profit per ton. Our focus on our core brands and the traditional channel has been crucial in achieving this profitability growth, given our clear differentiation and competitive advantages.
By maintaining our focus on these areas, we have been able to overcome market difficulties and continue to generate positive results in terms of gross profit. However, it is important to mention that in the second quarter of 2023, our EBITDA decreased PEN 9 million compared to last year. This reduction is mainly explained by higher SG&A expenses, which include PEN 15 million of one-offs related to production site improvements and organizational restructure. I'm gonna continue with consumer goods, international market dynamics on slide 16. In Bolivia, we continue to expand our home care platform to partially compensate for the reduced profitability in edible oils subject to price controls. This strategy has allowed us to diversify our revenue and mitigate some of the risks in this geography.
In our home care segment, we continue to experience steady growth, driven by volume increase, 5% year-over-year, and our pricing initiatives, despite the overall market decline, minus 1.2% in detergents, minus 13.2% in bleaches, and minus 5.1% in surface cleaners, leading us to achieve the market leaderships within the detergents category. In our pasta category, we have experienced a 1.1% decrease on our volume market share due to a reduction in the Tier 1 segment. However, in that segment, our Don Vittorio brand has managed to increase its market share. Finally, we notice the existing consumer concerns regarding inflation, especially due to the lack of U.S. dollars in the economy. In this regard, it is relevant to mention that the 2023 expected inflation rate is 3%.
In Ecuador, we continue implementing our go-to-market strategy to accelerate growth. We have developed new distributors with nationwide reach, allowing us to efficiently attend mom-and-pops and establish a direct structure for our key wholesale customers. This has led us to achieve significant growth, increasing our customer base from 5,000 to 50,000, and expanded our presence in 80% of the modern trade channel. On the political front, general elections will be held in August 20. In this regard, we are closely monitoring political and economic developments to capitalize on new opportunities and overcome challenges. Let's move on to slide 17 for an update on the performance of Consumer Goods Bolivia. First of all, our year-to-date revenue experienced a 5% increase compared to the previous year.
This growth is mainly explained by the excellent performance of our home care segment, which has seen a 26% increase in sales. However, despite the growth in sales, it is important to mention that our year-to-date gross profit is 5% lower than 2022. This decrease is mainly explained by a net effect between our home care platform, which has increased its growth, gross profit by PEN 7 million, and edible oils, which had a negative impact of PEN 10 million, primarily due to price regulations. Regarding EBITDA, we have experienced an accumulated reduction of PEN 15 million. This result mainly is explained by the impacts on our edible oil segment, which has suffered a negative impact of PEN 9 million due to price controls, and by mandatory payroll increases due to local re- regulation and advertising expenses to boost growth in our home care platform.
Let's move on to the performance of Consumer Goods Ecuador on slide 18. Regarding Ecuador performance, our year-to-date revenue experienced a significant increase of 19% compared to the same period in 2022. This growth has been largely achieved thanks to our go-to-market and brand development strategies. Although we have experienced a 6 percent point decline in our year-to-date gross margin, it is important to highlight that we have managed to deliver improvements in our prioritized categories: detergents, pastas, and sauces. It is important to mention that our year-to-date EBITDA is negative PEN 12 million. This result is mainly explained by our efforts in advertising campaigns and higher selling expenses within our prioritized categories, which are allowing us to reach the expected growth and market share gains. Let's move on to slide 19 for an update on our B2B market dynamics.
Out-of-home consumption continues to be a challenge, and it is still below pre-pandemic levels. We expected a slow recovery, which will be probably hindered by the El Niño climate phenomenon on the second half of 2023. Depending on the strength of El Niño, out-of-home consumption for the next year could remain flat or reach a maximum 4% year-over-year growth. We are currently focusing our efforts on building solid margins and improving returns. Despite the impact on volume, market shares on oils and shortenings are in line with last year. Given the market contractions, we have decided to prioritize top-tier volumes in order to maintain strong per metric ton margins. We are already implementing clearing up related initiatives, such as strengthening marketing efforts towards our Nicolini brand and promoting pastry production at bakeries, aiming at, aiming at recovering our market share.
Let's move on to slide 20 for an update on our financial performance of B2B. Despite market contractions, we stay focused on healthy growth margins, delivering a year-over-year increase of 2.9 percentage points in the second quarter of 2023. As a result, our gross profit per metric ton reached PEN 818 million soles, which represents a solid year-over-year increase of 18%, despite lower volume and revenue. EBITDA for the second quarter amounted to PEN 74 million soles, slightly lower compared to the second quarter of 2022. Despite the aforementioned impacts on consumption and volume, second quarter and year-to-date gross margin and EBITDA margin are considerably higher than pre-pandemic levels. Next, we will cover the aquafeed market dynamics on slide 21.
In Ecuador, shrimp ex-exports grew 14% year-over-year, mainly due to the continuous increase in farm yields, driven by new farming technologies and higher production due to better and expanded industrial processing capacity. These higher volumes were mostly exported to China, as year-to-date Ecuadorian exports to the U.S. and Europe dropped more than 10%. Shrimp international prices are at its lowest level since COVID-19, due to higher inventories. Going forward, we expect production volumes to slightly decrease as farmers close less efficient production areas and decrease their sowing densities. Additionally, farmers have faced higher costs, mainly due to fuel prices and higher operational expenses, leading them to be cautious with their production programs and preparing low-cost feed. Global shrimp market is expected to recover by the end of 2023.
Regarding the El Niño phenomenon, we are starting to see higher seasonal temperatures and increased rain levels in different production areas. The industry is preparing properly, and we are constantly monitoring our clients' operations to anticipate any potential risks. Regarding the salmon business, the consumption of feed has been stable. In the first half of this year, pricing for salmon has dropped compared to the last half of 2022. However, it remains at healthy levels for the industry. Both European and U.S. markets have built a solid demand for salmon, thanks to a strong presence in the retail channel. In this context, Vitapro will continue to improve its value proposition to meet and exceed expectations under challenging market and environmental conditions. Let's move on to slide 22 for an update on the aquafeed performance.
In terms of business performance, in the second quarter of 2023, Vitapro reached a 6% revenue growth, mainly explained by price initiatives executed to compensate the increase in raw material prices and the increase in volume, mainly in Ecuador. Gross profit per ton slightly improved, mainly due to price actions to partially offset higher prices in raw materials. EBITDA increased 6% year-over-year, mainly due to higher gross profit and a reduction in SG&A. Next, we will cover the crushing business financial performance on slide 23. During the second quarter, our gross profit decreased mainly due to lower crush margins related to a reduction in international commodity prices. Soybean oil decreased 21% during April and May. Soybean meal decreased 8% during the quarter.
In addition to structural lower margins, EBITDA was impacted by extra costs associated by the Peruvian and Bolivian border blockages occurred in the first four months of the year. These transit restrictions were completely lifted, and we are back on our full operation. It is worth mentioning that some of the negative impacts in our gross margin and EBITDA have been offset by a positive exchange rate effect of $13 million during the quarter, directly impacting our cash flow generation. This effect is generated by the exchange arbitrage opportunities, which allow us to require fewer U.S. dollars to supply the business with raw materials sourced locally. Although this effect is generated as part of the business operations and directly reflects on our crush margins, it is not considered as operating results, and therefore, as EBITDA, due to accounting policies.
Moving on to slide 25 to comment on our leverage, debt, and liquidity metrics. Regarding our debt metrics, the second quarter of 2023 has been a challenging one, exhibiting a lower EBITDA than expected. As a result, our net debt to EBITDA ratio increased from 2.8x in the first quarter of 2023 to 3.9x in the second quarter of 2023. This increase is mainly explained by the need to finance the soybean campaign for our crushing business, as well as the payment of our ordinary annual dividend in the second quarter. Regarding our liquidity levels, as of June 2023, we exhibited a cash position which amounted to PEN 537 million, PEN 403 million less than as of December 2022.
The decrease is mainly explained by pre-funding the working capital needs for our crushing business. In the second quarter, we successfully closed a five-year senior syndicated loan for $150 million. The proceeds will be used mainly for capital expenditures related to the expansion of our shrimp product, productive facility in Ecuador, and also for general corporate purposes. As of June 2023, we have disbursed $10 million, and the remaining will be available for disbursement until May 2024. Additionally, despite a challenging environment in Bolivia, we issued a promissory note in local currency for the equivalent of $24.9 million through the Bolivian capital market. The proceeds were used for working capital requirements in our crushing business. As of June 2023, our cash position covers 0.36 times our current debt.
If our committed credit line for $120 million and the remaining $140 million of our syndicated loan were included, such ratio would be 0.99 times. Finally, let me circle back to Alfredo to wrap up today's presentation with a view of what we expect for 2023.
... Thanks, Manuel. Let's turn to slide 27 to wrap up today's presentation with a glimpse of what we expect for our full year 2023 results. Although the second quarter of 2023 was not conditioned in sociopolitical events, and inflation rates are progressively increasing, other economic factors played an important role as household disposable income continues to be affected, and as a consequence, consumer markets experienced important contractions. This situation, coupled with strategic focus on boosting our core portfolio, as well as for optimizing production processes, led us to update our expectations for the rest of the year. Taking these factors into account, we expect for our revenue a flat to low single-digit decrease for the full year, mainly due to still challenging volume consumer markets in our main geographies.
With our EBITDA, we expect approximately 15% decrease for the full year, mainly explained by significant increase in profitability in our crushing business. Despite this, and the challenging context, we strive to continue improving our profitability in the rest of our businesses, focusing our tier-one brands and optimizing gross profit and gross profit per metric ton to compensate lower volumes. As for our investments for the year, CapEx will reach $145 million, including aquafeed. Excluding aquafeed, CapEx is estimated at $76 million. Finally, for leverage, we expect a 2.8 x net debt to EBITDA ratio by the end of 2023. In case a potential transaction with Rafinería is a success, the ratio would range between 3.1x and 3.3 x.
Similar to previous successful transactions, we will proceed with a gradual deleveraging plan. We're confident that our strategy, reflected in the aforementioned key initiatives and efficient capital allocation, will continue to lead us to deliver first quality products to our clients and customers, as well as attractive returns to our shareholders. This concludes our presentation, and we welcome any questions you may have.
Thank you very much for the presentation. We'll now be moving to the Q&A part of the call. If you have any questions, and you are dialed in via the telephone, please press star two, that's star two, for any voice questions. If you are dialed in via the web, you may also ask a voice or a text question via the web. We will now give a moment or so for any questions to come in. That's star two for any voice questions. Thank you. Our first question comes from Mr. Felipe Ucros from Scotiabank. Please go ahead, sir.
Thanks, operator. Good morning, Alfredo, Manuel, and team, for the space for questions. Let me start first with consumer goods Peru. Just wanted to see if you could give us a little more details around the kind of restructuring that you're doing in the business, to reduce the weight of value categories. Obviously, that should improve the health of the portfolio in the long term, but can you talk a little bit about what kind of timing you expect for these changes to take place?
Yep, Felipe, thank you. It's Alfredo here speaking. Let me just turn it over to Alvaro, who will actually expand on that specific point. As you correctly point out, it's key on our strategy for our consumer products business in Peru.
Thank you, Felipe, for the question. Yeah, I can go into that with, with more granularity. As you know, our core brands generate more profit and also bring more value to our consumers. So we're focused in on the growth of those brands. That means budget reallocation, that means correct incentives for our sales force. We strongly believe that those are the brands that we can generate competitive advantages. We are restructuring our marketing process to make sure that we have the correct insights to leverage that those strengths, even in a, in a strong or in an adverse economic environment.
Just to summarize, we're gonna, we're gonna go double down on those strong brands, what we call our emblematic brands, and that should help us be in a better, in a better position moving forward.
Thanks, Alvaro. Any details you can give us, more or less on, on timing, like, what one we could expect the normalization of the segment?
Yes. you know, gaining market share in those segments is not something that happens overnight. We have to have discipline and resilience to grow in an adverse environment as the one we are facing. It would be very difficult to give you an exact timeframe, but we are seeing already some early results as I was mentioning in the call. Sorry for the technical difficulties, by the way. We are already seeing growth in some key brands, and we expect that to continue in the next few months, and hopefully we can give more detail in the next conference call.
Okay. very helpful. Thanks. If I can do a couple of follow-ups. one on SG&A. you know, there, there was a, what seems to be one-offs related to the restructuring process. just wondering if, if this quarter showed the bulk of it or whether there should be a little more pain on the SG&A line on, on the next couple of quarters while the full restructuring takes place?
No, you know, the bulk, the bulk of the, of the impact was in, in this quarter. We had some restructuring costs and also some changes in our production facilities for our one of our most important businesses, our, our cookie business. That was done this quarter. We, we shouldn't see any more impacts related to those two items in the next two months.
Okay, per- perfect, that- that's very clear. My, my last one, obviously on, on leverage, which I think was the, the, the, the big question mark of, of the quarter. You- you've outlined, Alfredo, more or less, what the leverage would look like after the previous acquisitions. You also have some pretty significant maturities coming ahead of us, but it seems that EBITDA might be, might be suffering a little more for the next couple of quarters. Just having a little bit of trouble tying in the, the, the forecasted reduction in leverage, which, what seems like not an immediate recovery. Just wondering if you could kind of bridge the gap between, between those two.
Of course, let me turn it over very quickly to Manuel, who very quickly can elaborate on that.
Yeah. So, Philippe, in terms of leverage, obviously, the most significant impact that we're facing this year is significant decline in EBITDA for our crushing business. Even though the profitability for that business has had a significant decrease, the business is still requiring relevant investments in working capital. That is the main explanation for the increase in net leverage between December of 2022 and the current results that we're showing in this presentation. Moving forward, we expect that working capital requirements to significantly decline as we crush the grains, so that should help our leverage. We're also projecting a continuous recovery in our CPG business. If, if you remember in 2022, the second half wasn't a very strong, strong numbers for CPG.
If you look at the continuous improvements, month to month in the, in the past, couple of months, we believe that we're entering the second half of 2023 in a more solid situation, right. If you take into account the reduction in, in working capital needs for our crushing business in the second half of 2023, and continuous recovery in the CPG business, especially when compared to last year, we feel comfortable. Well, relatively comfortable that we can end the year at 2.8 level, 2.8 x net debt to EBITDA, as Alfredo mentioned in the, in the, in his guidance.
Okay. Understood. Thanks a lot for the color, guys.
Mm-hmm. Thanks to you, Philippe.
Okay, thank you very much. Just once again, a reminder, star 2 for any questions. That's star 2. If you are dialed in via the web, you may also ask a voice or a text question. Thank you. Our next question comes from Julio Torres from Inteligo SAB. Please go ahead, sir.
Thank you very much. Well, I have one question about the Consumer Goods Peru. It's well known that families with low income are bigger impacted by inflation, please, would you disaggregate the decrease in sales for traditional and modern channels for these units?
Yeah. Yeah, if I... Hi, Julio, thanks for the question. If I understand correctly, what, what the question is, under our consumer products Peru business is, given the, the lower income that a family, especially, the less fortunate ones, are, are, are facing, how are the dynamics that we have in terms of our traditional versus modern trade, distribution channels? To elaborate a, a little bit on that, let me just give it over to Alvaro, who will very quickly give some color.
Thank you for the, for the question. Yes, you know, the, the pressure that our, that our consumers are facing, regarding inflation is, is making them take some decisions regarding on where they buy their products and what type of categories they purchase. We're seeing The traditional channel strengthening its capability of receiving these shoppers and these consumers. We're also seeing some shifting towards lower-tier priced brands. We're also seeing some shifting towards smaller-sized products that, you know, require less purchasing power from consumers. We expect that to continue moving forward, but as we were mentioning prior in the call, that works toward our competitive advantage since we have great distribution capabilities in the traditional channel.
We, we expect that to continue in the next few months.
Okay. Did you have this, this note? How much did sales decrease for these channels?
Do you mean how much, how much did sales decrease in each specific channel?
In traditional and modern channel? Yes.
For our volume sales, in, in traditional channel, decreased around 4% or 5%, and I would say similarly in, in modern trade. We haven't seen significant variation in that in the short term, but we'll see how that moves in the next few months.
All right. Thank you. Thank you very much.
No problem.
Okay, we'll give another 20 seconds or so for any additional questions to come in. Okay, it looks like the call was comprehensive enough. I'll pass the line back to the management team for the concluding remarks. No further questions.
Great. thanks again, Michael, and thank you, everybody, for participating this second quarter 2023 conference call. As always, if you have any further questions or comments, please do not hesitate to contact us, and obviously, stay safe and have a great day.
Thank you very much. This concludes today's office call. We'll now be closing all the lines. Thank you, and have a great day. Goodbye.