Good morning everyone, thank you so much for waiting. Welcome to the earnings call for the Q4 of 2022 at Assaí Atacadista. I would like to highlight that if you need simultaneous translation, we have this tool available on the platform. Just click on the interpretation button through the icon on the globe at the bottom part of your screen and choose the language of preference, Portuguese or English. This earnings call is being recorded and will be provided on the company's IR website, ri.assai.com.br, where you can also find the earnings release. During the presentation, all of the participants will have their mics off. Soon after, we'll begin the session with Q&A. To submit a question, please select the Q&A icon on the bottom part of your screen. Write your name, company and language to enter the queue.
As you're announced, a request to activate your mic will appear on the screen. Soon after, you should activate your mic to submit questions. We'd like to ask you to please submit all your questions at once. The information in this earnings call and possible statements that could be made during the call regarding business perspectives, forecasts, and operational targets and financial targets at Assaí represent assumptions and beliefs of the company's management, as well as information that's currently available. Future statements are not a guarantee of performance. They involve risks and uncertainties and assumptions because they refer to future events and thus rely on circumstances that could or not occur. Investors should understand that market conditions and other operational factors could affect the future performance of Assaí and lead to results that differ materially as those listed in future statements.
I'll pass on the floor to Gabrielle Helú. She's the Investor Relations Director at Assaí.
Hello, good morning, ladies and gentlemen. Thank you for your participation in our earnings call for the Q4 of 2022. We'd like to invite the management team to present themselves. We have Belmiro Gomes, Daniela Sabbag, the CFO, Wlamir, the VP for Logistics and Commercial VP. Anderson Castilho, he's their Operational VP. Before we begin the presentation, I'll pass the floor on to Belmiro for his initial remarks.
Thank you, Gabrielle. Thank you everyone for your participation. I want to thank you all for your presence and especially thank all of the Assaí team and our partners and suppliers.
I want to thank the members of the board, due to the major efforts and work from our team, and other people and other companies, suppliers, supporters that led to the results that we have in the presentation and also the expectations we have abroad. 2022 was an extraordinary year, one of the best and most important in our growth track. We had 60 openings of new big stores. We invested over BRL 4 billion. With this, the company generated over 16,000 new job positions. We became the biggest private employer in Brazil.
It was the year where even with all of the challenges economically, inflation, instability, pressure on consumption, the company kept its growth track record and stability, predictability, whether we look at numbers generally, but also when we look at the different forecasts provided to the market in this project, especially with the purchases of the hypermarkets from Extra. With this, we reached 108 openings in the last three years. The company doubled in size in the past three years, and just as we're going to see in Anderson, Danny and Wlamir's presentations, many other indicators also doubling.
The strategy we've been working on to manage a store network plus a huge expansion process that we could spend hours here talking about with all the details and the levels of efforts, we believe that the numbers really demonstrate the characteristics and stability. We also had this year some evolution, and this is important in the model. We've been searching for this, as we mentioned, and other opportunities to improve the purchase experience of customer staff regardless of their social levels. We've been working on major efforts to keep our main low costs, but also improve purchase experiences for customers, consumers, regardless of their social levels, but also, with B2B customers.
We had important progress in governance with the operation of a new related party and conflict of interest policies as well, which is in line with the board as well to keep an important evolution from a governance perspective. I'll pass the floor on to Wlamir. He's our Commercial and Logistics VP. He'll give us a little more details on the performance and sales margins, and then we'll get back to the expectations for 2023. Thank you very much.
Thanks, Belmiro. Good morning, ladies and gentlemen. I wanna thank you all for your presence. Also I wanna thank the Assaí team and... For some reason, I can't see the presentation on the screen, but I think it's there. Yes, it is. It's shared on the screen.
Okay, great. So let's talk about the sales in the Q4 and what happened in the year. As you can see, we ended the year with the Q4, sorry, with BRL 16 billion in revenue and net sales. We doubled the amount of sales in three years when compared to 2019. This is repeated when we take a look at the closed year. We ended with growth of 31%, BRL 54.5 billion in revenue. The numbers are very strong, very solid, and this demonstrates the resilience of Assaí and stability in our business.
When we look at the numbers, I think a good part of this contribution came from the stores we opened last year, whether they're organic or also from the converted store network, which are within this ramp of what we planned for these stores. It's really in this growing curve with what the company expected. We should also mention that in this part, the increase of flow and this has really made us very satisfied and excited for 2023. When we take a look at this, we still have an important inflation and trade down impact. Overall, I think we were able to reverse this with the inclusion of new categories, new services we're gonna provide in detail up ahead, and also the fact that we were able to increase the customer flow.
When we look at sales, we see the Nielsen measurements. We can understand that our commercial strategy is very good and, well, very precise. We had in the Q4 over 2% market share gains nationally. To get into more details here, when we look at the city of São Paulo, it was an operation where we invested a lot. We had 27 stores in the state of São Paulo. We had an increase, 4% in the state. Just to give you an idea, just in São Paulo, we increased our share by 5 percentage points. Even with these stores being in a parameter that is really big, especially when you look at the average sales area with the other stores, we were able to keep growth.
We went from BRL 4,500 sales per square meter to BRL 4,700, demonstrating that with all the innovation, and the evolution of our model, we continue to be very precise in our proposal. If we can move on to the next slide, please. Well, my connection is not that great right now, but anyways, just for some reason, I'm having some technical issues. When we look at the gross profit, it's also doubling and we had about BRL 2.7 billion of gross profit in this quarter and BRL 9 billion in the year. I think regardless of the gross profit generated, I wanna highlight the stability.
If you take a look at this, we brought the gross margins in the last four years, and you'll see that in this quarter and the year, the variation is very small, regardless of the size of the efforts to open up these 60 stores, with pre-op costs. I think the strategy, everything that was done also allowed us to deliver a value proposition that was better for the customers, adjusting the assortment in each store and region for the surrounding public. I think we're very precise, and I think we're really focused on really being able to provide a good purchase experience for each region. I wanted to take advantage of this moment to mention the investments in our logistics.
To support the expansion of the 60 stores in this year, we had an increment. We opened three new DCs. One was a substitution to smaller DCs, and we increased our capacity for storage by about 40%. We had this new unit in Belém. It's a small DC. Besides looking at all of this, we also have the back office structuring this to support not only this investment in 2022 with logistics, but also thinking about the ongoing expansion for the next tree years will be supported by a logistical structure. I think that was pretty much it. There's another point I didn't mention, which is a question that's gonna come around, which is, you'll see that in the working capital, especially for supply, we had a significant increase.
These were negotiations of an increase in deadlines with a huge expansion. We did negotiate some additional timing and terms. This would also provide some relief on the CapEx invested. I think that's pretty much it on my side, but I'll pass the floor on to Anderson, so he can give us more details on the operation. Thank you all so much.
Well, thanks, Wlamir. Good morning, everyone. Thanks to all of our team and partners. We're super thankful and happy with the work. Reinforcing this that Wlamir mentioned, it's really an all-time high. We're talking about 60 stores with the project we began with a initial guidance for 52. We challenged ourselves to make those 58, and we reached the end of the year delivering 60.
I think it's an all-time high for Assaí, but also for the sector as a whole when it comes to cash and carry. This demonstrates the strength and capacity of our team. We had 13 organic stores and 46 hyper markets transformed within this in 17 different states, which reinforces the complexity and the strength of our regional offices commercially with marketing as well, and operations to execute this project, which involved the entire company. It was a major challenge, especially in the last quarter. We opened over 37 stores, and we reinforced that we have a project with 47 hypers that we're transforming from hyper markets to cash and carry stores.
We have an even bigger challenge that demanded a lot from our team for engineering and studies, especially when it comes to providing some structural reinforcements. We're talking about a hypermarket with about 1,000 kilos per square meter and systems for firefighting, cooling. It's really a restructuring process to be able to service our business model. I think we have some examples that we've mentioned due to the size of the project. We're talking about 12,000 km of electric cables. It's a lot. 4,050 Cristo statues, if we were to consider the amount of concrete.
At the end of the day, what we always worked on is to always offer a nice store with good lighting, modern equipment, structure and furniture and equipment with low cost perspectives and thinking about the future maintenance of these assets. We have customers have a real different experience compared to what they had before and what they're receiving now. When we talk about low costs, Gabrielle, please if you could go over the next slide. Here we talk about the timeline, and we can show clearly that the discipline from our team when we talk about expenses, we have major focus on developing the project, bringing innovation, but always being careful to make sure we don't harm the essence of the business model, which is low expenses. We offer this new experience.
Customers that were hypermarket customers really feel that there's a big difference in the model, and the quality of the store we delivered. We always have this perspective for the B2B and B2C customers, we adapt the assortment, improve the services, customers always search for lower prices and a bit of all of that. When we take a look at the timeline, we have this project we've consolidated already, we expanded this even more. We added this to our stores. We have the Emporium, which is basically, we kind of just changed a bit of the service provision we already provide to customers in all of the Assaí stores, especially when we look to the transformational market, the restaurant owners, pizza shops, the pastel and other snack shops.
We standardized this, considering the size of the hypermarkets, we took on to concentrate this and bring this to the customer with better services, searching for better sales, of course. The numbers reinforce the discipline of our team with expenses, timeline, and of course, without changing the Assaí work, right? Without losing our characteristic of price and low costs, right? We deliver, as Wlamir mentioned, the stores have a really positive perspective. We have a customer flow that's super interesting also. We already had this as a reference in the stores we transformed in the previous years. This remains, and this really makes us continue to work, continue to expand, and we imagine we're really on the right path.
I also wanna take advantage of this moment to thank all of the operations team and the areas involved. I think we had some fantastic work done, and that's basically what I had to share. Thank you so much. Now I'll pass the floor on to Daniela, our Financial Director.
Thanks, Anderson. Good morning, everyone. As a consequence of everything that was already presented by Wlamir and Anderson, I want to talk about our EBITDA, and basically, this EBITDA doubled in three years at a period where we opened up 107 stores. We ended the Q4 with adjusted EBITDA of BRL 1.3 billion.
What's important to highlight is that if we were to offset the effects of the pre-operational expenses regarding the expansion this year, we would have an EBITDA margin in the quarter of 7.7%. In the year, the EBITDA reached 3.9%, a margin of about 7.2%. If we were to adjust the pre-operational expenses as well, we would see that we have an EBITDA margin of about 7.4%, which is pretty similar if you were to consider what we delivered last year than if we were to remove that and have the recurring stores. Eliminating the effects of this expansion, right? When we take a look at this EBITDA, it's really relevant.
If we were to consider all of the expansion historically, we've already discussed with 60 store openings, and its profitability has been very consistent. It's the fruit of a very resilient portfolio. I just wanted to summarize a little bit of what we've already been discussing with you guys. The conversions have been presenting a quick maturity as well as a rigorous control of some of the expenses that Anderson mentioned. I think that reinforcing that there was an expectation from the market when we were talking about the store conversion project, that our EBITDA margin would be around 7%. At the end of the day, we delivered a number that was surprising, which is 7.2%, and we're super satisfied with that and these results.
From this slide, that's pretty much what I wanted to mention, right? We could move on to the other slide with the financial results and cash generation, maybe. We had a financial result that in the Q4 reached BRL 445 million or 2.8% of the sales. We always bring in this analysis by excluding the effects of the interest, lease interests. From this perspective, the financial expenses were about 1.7% of the sales. This result, of course, in the year, is about BRL 1.5 billion, excluding the BRL 1 billion liability effect and 1.8% of our sales. Of course, we have an important effect here with the increase of interest.
This year we had 212.4 and last year in 4.4. That was a significant impact. Also the fundraising we had to be able to handle all of the investment plans and store conversions. We had some fundraising we announced quarter-over-quarter. These were really important and sometimes even a bit, sometimes helping to lower this. Our debt was about from eight to 12.4, which also explains this effect a bit. Moving on to cash generation. Just a second. About the debt, I think it's important to mention that our cost of debt is still CDI + 1.5, and the average term of three and a half years. We ended the year with about a EBITDA, Net Debt to EBITDA ratio, about 2.2%.
2.19% to be precise, within our expectations and even a little bit lower than what I was mentioning to you guys. We were talking about 2.5%, but there was like some displacements of other payments. That kind of explains part of this. When we move on to cash generation, the cash generation in the past 12 months, we generated BRL 4.2 billion. This is super important for our performance, and it's an increment of almost BRL 2 billion in a really important part, which was coming from the operational improvements and also the strengthening of the company in central regions with high density. That optimizes working capital. As Wlamir mentioned, this was an important contribution for this kind of cash generation.
Here we also have an understanding of the investments of BRL 3.6 billion with the extra payments and financial expenses, as I mentioned. Of course, this net debt for the first quarters, due to the seasonality, increases a bit because we have all of the CapEx with the second wave of conversions, which takes place now in the next quarters. Naturally, this is a variation, but I think it's important to mention that it's really within what we planned for this project and very coherent as well, and what we've been mentioning to the market as a whole. On the next slide, for final remarks when it comes to our results, and then after I'll pass the floor on to Belmiro.
Here we have an overview of the profits. The quarter was BRL 406 in a margin of 2.5% and in a year of BRL 1.2 and margins of 2.2%. It's a profit that we consider to be really strong, and it becomes even more relevant in this context with high interest that we've noticed throughout the year and all of the investments. That, of course, reflects the maturity of the stores and the success of the commercial strategy and discipline towards our expenses. I think these are the main points when it comes to the results and earnings. I'll pass the floor on to Belmiro to talk about ESG. Okay.
Thanks, Daniela. Of course, when you look at all the numbers and the advances with customers, but also the amount of stores were important advances, especially regarding ESG. The company is super aware of its social responsibility and due to the size of the company, the amount of customer service. We had many advances, some highlights, even with the inclusion of Assaí in ISE, the index for B3, in companies when it comes to sustainability, and the fact that we came in with a high level of suppliers and within this GPTW index as one of the 10 best companies to work in. Also the creation in 2022-2023 of the Assaí Institute, which is gonna be super important to support our work in social projects.
The company has many different initiatives in this sense, and this really is in line with our values and culture. There's major work also to be this reference when it comes to social advances, and inclusion of people with disabilities and strong search for gender equality and other racial issues. The company is moving along with many advances when it came to this topic. We can advance now. Expectations for 2023. When you consider the amount of store openings that were made, from 107 openings, 60 different store openings, we are keeping the investments, and the company remains having this strong expansion plan for 2023, where the objective, of course, is to complete the conclusion of the stores, the Extra Hiper conversions, right?
We had 19 conversions we have to deliver this year still. The opening with 40, the objective of having 40 openings. Till the end of 2023, there is an expectation of a better curve in the interest rate. This doesn't change investments in new stores. The projects we had are the same when it comes to the perspectives and expectations when we deliver this project, as well as with the organic stores. Even if there's still some pressure in this Net Debt to EBITDA indicator due to this wave of payments, we're gonna follow this deleveraging curve. It's gonna be really quick. We should end 2023 with a Net Debt to EBITDA of at most 2x .
In 2024, this will drop to 1.5x, even with a scenario that is a little more aggressive for the interest scenario. We have seen once again, food mentioned some more inflationary indexes. There's some relief when it comes to pressure, and we've seen some analysis, maybe the drop in the inflation could harm sales. We have to remember that big part of the population had important trade down in the past years. If you look at the historical curves in the food sector, but especially for the wholesale operations, normally same-store sales in a period with high inflation grows less than the inflation, but it grows even more when you have lower inflation because the population is very anxious to resume or recover their normal purchase behavior.
One of the means that the population adopted in this high food inflation was to adjust their purchase mix. When you take a look at what for like a consumer that's a typical wholesale consumer, he has like a certain amount of money he can spend regardless of the inflation. Even if the inflation is gonna provide some relief, which would be very beneficial to the population, this should favor us because of the trade down effect we noticed that was so strong in the last three years. What we've seen so far is the conversions we performed and the calendar of the Q4 was maybe not as we expected. We started opening a lot more in the end of 2022.
January, we already have the first full month of these conversions and the market share gains that Belmiro Gomes mentioned were really accentuated in January and February. Assaí goes through a major gain of over three points in market share, and we're already at 5 percentage points. To give you an idea, especially the stores that were recently converted and this pressure you have on income and the search for prices with a combination of what we did to improve the purchase experience, expanding the assortment and being careful with the low operational costs, really generated an important combination. We're noticing this in the flow. We're reaching many records and all-time highs. In January, we had more than 6 million tickets due to the strong contribution of the recently opened stores.
Of course, we've seen that these stores didn't have such a big impact in the margins. The company continues to follow a strategy to keep up with the ramp-up of the converted stores, balancing sales and margins, with our eyes open on competitive advantages. If we need to invest in these margins, that will take place, but it's not what we're looking at at this moment. We keep this expectation for 2023 with the EBITDA levels pretty much at the same level as 2023, and that's when the company's really gonna search for growth.
The growth so far, we're at the 1/2 of the Q1 , and it's gonna be higher than the growth that we had in the same-store sale base and the total base, which gives us more conviction that the plan as it was executed and what we presented to the market, we've been able to achieve even a little above what we had mentioned to the market as a whole. Within 2023, we should have some evolution, ongoing evolution from a governance perspective. We really have our eyes open, and we've been talking to our shareholder, our controlling shareholder, to perform the modifications from a governance perspective to guarantee the security of the minority shareholders reflecting on the new board to keep the same shareholding stake and share.
Also when we look at some procedures to really set the track to become a true corporation. This is what I had to say for 2023, and I'll pass the floor back to Gabrielle for the Q&A session. Thank you so much, ladies and gentlemen.
Thank you,Belmiro . We can start with the Q&A session. We're gonna follow the queue of the questions that arrived. Now we'll start the Q&A session. We want to remind you that if you have questions, you should select the Q&A icon at the bottom part of your screen. Write your name, company, and language to enter the queue. A request to activate your mic will appear on the screen, then you should activate it to submit questions.
We'd ask you to please guarantee that all of your questions are submitted at once. We will start with our first question coming from Danniela Eiger, the sell-side analyst from XP. We will enable your audio so you may proceed, please.
Thank you. Good morning. Thanks for taking my question. I'll congratulate you on the results and earnings. We have two questions. I have more, but I'll focus on two. The first one is when it comes to the growth dynamics that you mentioned, you mentioned that it's accelerating compared to what we saw in the Q4. We've seen a lot of investors being very concerned with an impact of possible slowdown in the food inflation and how this could maybe reflect in the same-store sales.
They wanna understand how you're looking at this overall equation between price and volume over the year. Maybe a recovery in volumes could contribute to bring in a little more color on this acceleration if this comes from this point. I think that's the first aspect. The second point you've already covered a bit, which is about governance. We also think it would be good to have a little more visibility. You've already mentioned that a bit in the past, but what's the mindset with Assaí more to the midterm when it comes to governance? Is it like moving towards a corporation or really having this year a renewal of the board as an important sign that this is the path you're going to be following in line with the main shareholder?
It would be good to understand a bit more of these discussions, right? What the path is for the company in the midterm when it comes to governance.
Perfect, Danniela. Thanks for your questions. Let's start with the second question. Governance, yes, this is the path. We've been providing some signs to this. Of course, we have many different alignments. We're really in line with our controlling shareholder. Renewal of the board will provide one more sign of this, just as in the Q4, the modification of the policy for related parties provides some comfort since we have 70%. We will do so to be able to make the investments quicker.
We won't work on such an aggressive approach to accelerate the ramp up curve, destroying margins very quickly. We had, we reached almost 6,000 employees-7,000 employees. You can see this, but the biggest highlight, and the level of costs, we were able to engage more than 3,000 people for support with training, new hires, and really being able to keep the stability. There was a concern, of course, the market always has concerns, but first, we were able to open what was the impact in the margins and expenses and then the continuity of this. The first, we're super optimistic now, especially with the numbers we've been looking at so far in the relative perspective compared to the market. I hope I answered your question.
Just this point on the organic run rate, the maintenance of these 20 openings would make sense at all?
Well, we can't mention that it's a clear sign because of course there is an indicator that's really important on the return on invested capital. One of the points is that Assaí is really acknowledged for its growth track record, but also because of the delivery of major returns. These 20 projects were already underway even before the acquisition of the extras, where we really focused on the conversions of the hypermarkets. These are projects that we valued more with the best projects from an organic perspective, balancing out the licenses, maturity in the stores and margins.
There was a significant increase in the cost of construction, especially when it comes to cement, concrete and steel, which is something that in the organic stores, where you build all the infrastructure and the foundations, there could be a bigger impact and this could lead to a revision in the project portfolio. At least 15 openings in the next years could be expected. There's a focus also on deleveraging. In 2022 and 2023 we're pretty strong. We're expecting the curve to take place in the Q4 this year. In 2024 especially, we plan to deleverage the company a lot because then we've already gone over the big investment period.
This is not only with the cost of conversion in the stores, but also the payments made to GPA, which end in 2024, the smallest installment is in 2024. That's when we already have a Net Debt to EBITDA ratio that's smaller than 1.5x.
Perfect. Thank you.
Now our next question is from Maria Clara, the sell-side analyst from Itaú. Maria, we'll open up your audio so you may proceed.
Hi, guys. Thanks for taking our question here on our side. We'd like to explain a bit more of the issue with the improvement in the dynamics with your relationship with suppliers. As we think about more of a gross margin perspective, is it reasonable to consider that these more favorable terms could positively impact the profitability dynamics when you look up ahead?
This is from a working capital perspective, does it make sense to think that we have a new working capital level in the operation? Thanks.
Wlamir, do you wanna answer this one?
Yeah, sure. I'll answer. But thanks for this question, Maria Clara. Of course, when we consider the negotiation with suppliers, this is something constant. What we are estimating is that with this trend towards expansion, we sat down with the suppliers and we had this movement to increase the terms. Of course, as I mentioned, this is something that we're gonna be working on extending, now in 2023, 2024. We were able to achieve not only this in the negotiation of terms, but also pricing.
When we look at the stability and balance between the gross margins, but also in the levels of stock, this demonstrates the precision of our commercial policy and what we can deploy. Yes, we continue to negotiate termings, to be able to continue to expand and also negotiate our prices to be able to be competitive. When you add up the gross margin, working capital, expense control, makes us have this share gain. If you look at the other weeks, we had some share gains, almost 28. This shows that this relationship with suppliers has contributed to the maintenance of these indicators and the expectations that we'll keep these gains that we kept in 2022.
Thank you. Perfect.
The next question is from Marcella Recchia, the sell-side analyst from Credit Suisse. Marcella, we'll open up your audio so that you may proceed. Now you may proceed, Marcella.
Thanks, guys, for taking my question. We have two questions here. The first one is about capitalized interest. We know this has been a major factor for our discussions throughout 2022, looking at the amount of stores that were added to the base. We also know that this represented most of the profits in the company. We can see that the total was almost a little more than 60% of the profit in 2022.
As the company is completing the conversion process and opening up these last Extra stores, what should we expect throughout the first semester until the opening of the last conversions when it comes to capitalized interest that's still impacting the profit line? That's my first question. The second question is about the conversions. In our conference now in the beginning of the month, we had feedback that the conversions already have sales very close to the uplift of 2.5x . The profitability is above expected. This is especially due to the bigger mix of individuals still within sales.
Belmiro, I wanna know from you if this is something you're looking at as something occasional just due to the macroeconomic scenario, or if this certainly represents an opportunity for the gross margins to be better in the long run when you consider a mix, that could also be better. Thanks, guys.
Thanks, I'll answer about the conversions, then Daniela will talk about the capitalized interest that's been significant. That's really what we are working on. Daniela will highlight this more. When we look at the conversions, the pace is still kept. We're looking at two curves, the sales curve and the margin curve. At this moment, we mentioned that there's gonna be some stability because we always need to be prepared for an increase in competitive advantages.
Of course, these stores, due to the level they have and the region they're in part of, we do have expectations that we'll reach a better level of margin, working capital, not only due to the current scenario, but also due to the fact that we already had the expertise in the other organic stores that were open in downtown regions for other conversions, and that we really have been searching for another stance, expanding the improvement in the purchase experience for customers and the assignment to reach other social levels. We've been searching to do what has been already going on in other countries, where you see all of the population buying in operations that are very similar to ours. We do expect this and of course, it depends on the company's discipline to manage this.
We have a huge country with a lot of diversity and a lot of inequality, which places a bunch of different challenges when we look at different regions. There is an expectation to capture more margins. That's why we're very confident about this project. Of course, we're very careful when we have other factors, such as an increase in competition and more pressure from the market. That's why we're being more careful. Since the stores have a performance now, when we look at January and February, that's pretty much in line with what we planned. We still have some sales ramp-up space that we wanna search for, and it could be a little premature still.
We get into some regions where they're a part of, I think there's some room for this. We were even criticized due to changes in our business model. People are throwing sticks and stones, but we know that any model needs to evolve, and there's evolution, modifications, and these models that were kind of left, and they operated in our sector, and they kind of kept the same model and the needs the customers have also changed. Customers wanna have the best purchase experience, and if it's possible to do so, keeping low costs, we must do so. Sometimes people that we never imagined would buy in a wholesale operation, they're gonna be surprised with the level of experience and the product and the service level that they find.
Of course, a retail company that works with thousands of employees and millions of customers, besides this positioning commercially, there's also when you look at this. This has been a big concern in the company, and the numbers have been proving this consistently. Now I'll pass the floor on to Daniela to talk about capitalized interest.
Okay. Hi, Marcella. To answer your question here, a bit of what we've been discussing on this topic. The first highlight is that the capitalization, as Belmiro mentioned, follows the accounting guidelines, and this is not a new practice in the company. We always have been disclosing our CapEx, and we always take a look at the capitalized interest, where when the company's when the store is under construction, you have the capitalization.
This is, of course, something that's more significant due to the volumes of stores this year. We had a reduction in this line that was about BRL 100 million. That's in the explanatory notes that you can see. Of course, this follows the schedule for store openings. We concentrated a little more on the end of the period. We have a reasonable amount. It should reduce a lot as this takes place. It's not a new practice for us. It's an accounting guideline we follow. It's within our best practices. If I could have a quick follow-up just about this, the tax line.
We've seen some volatility that's really significant in this line. We lost a bit of the reference of what this effective tax line would be after some of the ICMS exemptions you started to consider as a benefit. Is there some visibility on what we can take on or expect as something recurrent from this year onwards at a more adjusted basis?
Just to round it off a bit, we had about BRL 70 million with an effective tax rate of about 8.6%. In the previous quarter, we had published about BRL 60 million. We can give you some more details to be able to help balance this out. There's always gonna be some kind of a variation with regards to this.
This is connected to the ICMS. It's really gonna depend on the sales mix for the different states and exempt categories. We're always gonna have to hold on to that depending on the way and the region it's in, and that makes you sell. We can balance this out and think of a way to communicate this to give you some better guidance. This variation, this is always gonna have some kind of a variation. It's not a fixed number. Unfortunately, in Brazil, you have some tax changes, and that's what must happen. Anyways, when it comes to this effect, you're not at the effective income tax rate.
When you look at this, although there are some variations, there could be some other monetization, some other credit, which is not necessarily taxable. For projection max effects, you could use the average in the last three quarters or four quarters, and it's gonna be a pretty good average. This is the average we've been working on internally. Of course, we've seen that there have been some changes and decisions. One big decision that was disclosed does not really affect us because we had no lawsuits in this regard. When it comes from a tax perspective, this is gonna be a year with major changes. There are many different changes from a tax reform perspective, increase of the tax loads.
Taxes and fiscal issues are always a challenge in Brazil.
Okay. Excellent, guys. Thank you so much for the answers.
Moving on. The next question is from Vinicius Strano with sell-side analyst from UBS . Vinícius, we will open up your mic so you may proceed. You may proceed, please, Vinícius.
Hi, good morning, everyone, and thank you for taking my question. Could you talk about how your performance was in the B2B channel and B2C channels when you think about volumes and what you're looking at and expecting when it comes to the mix for these two segments in 2023? Would you also be able to talk about the converted stores? Are you looking at some change in the B2B mix or B2C mix? Do you imagine that maybe...
Well, could you give us an idea on the profile of the public you've noticed in the converted stores? Are these consumers with higher income? Here's a little bit more of a specific question. Could you talk about what you've seen when it comes to the evolution in occupation costs here and even a bit more in line with the inflation when it comes to the cost for construction? If you could have a quick discussion on the CapEx for openings and conversions and how this has evolved. Thanks.
Thank you, Vinicius, for that question. There is a shift in the customer mix, and that's already expected. That's not that related because it's a lot more, of course, related to the regions it's that they're in. This already happens when you have the organic store openings.
Initially, even when it's a curve, where you have the necessary timing for a new store openings, which varies. Generally, what we should see in this channel is a little more share from the final consumers. If you look at how these are moving along, you can see that this rate has been increasing. Within the B2B customers, it's pretty stable. What we see is some changes, and even the distribution with the actual industry. We've noticed with the increases in the logistical costs of the categories that these B2B customers were buying with, and they've tried to supply in a cash and carry store.
Even when we look at the level of density in these stores, we do expect that there'll be a bigger presence of end customers or B2C customers. Sometimes it's difficult to measure this number because you have, in some cases, some B2Bs that also have a high level of non-formality or non-identification. In these stores, you normally have about 70%, 75% of consumers and about 25% of the B2B custom public. We could have an error margin about 5 percentage points, considering that it's also very common for some small companies, which we sometimes call utilizers, and sometimes they sell clothes, but they also come and buy, like, cleaning supplies or other items that they use in their clothes store, and they also buy for their own house.
Normally, it's a big focus also on small companies, entrepreneurs, regardless of if their commerce is super specific for a sector. When we increased the cost of construction, the inflation was quite perverse, not only in the food sector, but this has increased costs, especially for the newer stores. Now an organic store, you have a big variation depending on the region you're building in, the area of the store and the level of the foundation. An organic store could cost BRL 80 million or even more than this, depending on the level of the foundation you're gonna use for the store. Of course, there have been more investments and some evolution in these stores, which also impacted our costs with conversions.
We had estimated a initial cost at a comparable base from an organic store, about BRL 45 million. This number has gone over and of course depends on the construction work, and even considering the size of these units that were converted. We have stores that have over 10,000 square meters. There was also a concern on our behalf, with making these stores really reach new conditions, right? To avoid costs of maintenance that's so high and avoid renewals or renovations in a short period of time. Sometimes you save initially, but that's gonna cause your OpEx and maintenance costs in a short period of time. If you had the opportunity to get to visit these stores, you'll see that they really have new conditions.
Thank you, Belmiro. Perfect.
Our next question is from Vinicius Pretto, sell-side analyst at Bank of America. Vinicius, we will enable your mic so that you may proceed.
Good morning, everyone. Thanks for taking our question and congrats on the results. We wanted to know if you guys had seen any lessons learned with the different initiatives with services and assortment, and if this adapted led to any kind of changes with the new store conversions. Yes, there are some lessons learned. Of course, these are acquired not only in these stores, but also in the organic expansion plan we had. Some of these services had some pilot projects that we worked on that did not continue, and many of them were continued expanding to the existing store park. In the last year, we opened over 100 butcheries.
There's a, of course, depending on the region, you have a different level of need. This is part of this evolution in the model to be able to penetrate other social levels, of course. Obviously this store park network with the different locations gives us a base of knowledge and lessons learned. It's very significant. When we look at improvements and other points that we also think we have room for, when you look at a consumer with a higher income level, more availability as well, to have a bit more expense in the sector, as long as we can offer an adequate proposal, of course, keeping the confidentiality of each business model. Yes, there are lots of lessons learned. All right.
The next question is from Ruben Couto, the sell-side analyst from Santander. Ruben, we'll enable your audio, so you may proceed.
Good morning, everyone. How's it going? When we talked about the increment in productivity, about BRL 4,500-BRL 4,700 and now in the end of the year with the conversions, I wanted to understand about this number. Is it exclusively in the state of São Paulo, the metropolitan region of São Paulo? I thought this was really interesting considering the level of maturity of the recently opened stores and converted stores. Also there's a concern that some people had about cannibalization. When we look at this cannibalization topic, how has the level been in the converted stores that are close to those that already existed, where there was already some kind of installed store? Has there been any adjustment or is this in line with what was expected?
Well, getting back to cannibalization, yes, that exists. There's no way out. We're in regions where we were already present and other players were already present. We believe that, around December, and from the total base, so it's natural that, eventually what happens in the big cities, like in São Paulo, we have some stores with a lot of operational pressure and so, sometimes we didn't have the conditions to service the customers. There was a big queue on the outside, so the level of services as well, that was, provided. But sometimes you need a store in that region. It's in line with what we expected. The market maybe didn't expect a little more of impact.
Maybe it would be about 12.5 if we didn't have stores inside regions that were that close. What happens is that B2B is sometimes quicker than B2C because businesses have to go farther. Sometimes you have a different category of products. If you open up a store that's 100 km away, obviously they're gonna start buying from there. It's natural that when you have an expansion, and especially when you have to move on to a similar model, with less overlaps, and to avoid the level of cannibalization and some stores that were relatively close. The sales per square meter that Belmiro highlighted considers all of Brazil. You have a variation that's very significant when it comes to the national territory.
When you look at the purchase power, sometimes it's not only because you have a smaller volume in the quantity or amount of products sold, but sometimes it's just the average price. But sometimes, it's a product with lower added value, but this is an average for Brazil, and I hope that answers your question. Yeah, no, that's clear.
The next question is from Nicholas Lahane, the sell-side analyst. Nicholas, we'll enable your audio so you may proceed. You may proceed, please. Okay. Good morning, everyone. Thanks for taking my question. Belmiro, just wanted to get back to the organic expansion you mentioned.
How many stores for the store openings have you already hired for 2023 and 2024? How are you looking at the scenario from an industry perspective? Do you think you have room to accelerate the M&As once the balance sheet is already a little deleveraged? Thanks.
Well, thanks, Nicholas. M&A is not what's on our strategy today. Our strategy is to really look at the organic stores that were already in the land bank for the company. These are projects that are practically prior, all prior to the acquisition of the extra stores. What happened was a bigger selectivity of these projects to adjust the cost of construction in this new reality, without leading to impacts in the ROI. The M&A is not our target.
Our target is to finish the project and to deleverage in the company. Of course, this does not mean that it's a completely closed door. It'll always be, as I mentioned, kind of on track. As soon as we have the deleveraging or we can do this, it could be that it could happen, but it's not our main strategy at this moment. I do believe that maybe for 2024 or 2025, it could be possible for us to be a little more active in this sense, but this is really connected to the company's leverage as well. Very clear. Thanks, Belmiro.
Moving on. The next question is from Irma, the sell-side analyst at Goldman Sachs. Irma, we'll enable your audio. You can proceed. Thanks.
Good morning. Thanks for taking my question. I have two questions. They're very fast. The first is if you could give us an overview on the level of CapEx for 2023. In line with this, could you also remind us about the agenda for payments that you still have for the Extra stores throughout 2023, especially in the beginning of 2024? I think it ends almost in the end of 2023. The last question related to this is if you could help us understand a little more on the expectations for cash flow for 2023, because we saw you've already reached a leverage 2.2 versus the end of the year. Now you also highlighted the objective of reaching close to the 2x and to at most 2x till the end of the year. It seems maybe a little timid initially.
Obviously, I understand you maybe have some CapEx aspects for 2023 and payments that need to be done. You have higher interest. I just wanted to understand a bit of your mindset when it comes to cash generation for this year. Thank you.
All right. Daniela will talk about the payments now from GPA, but a bit of the investment CapEx. We're finishing the numbers, and we should be highlighting this in our annual report. We have an elevation in the CapEx as well due to the organic stores. There are about 20 organic stores, and they have a higher level of CapEx. There's also some revitalization of the existing store network and the services in stores that were not implemented yet.
Part of this, since the openings in 2022 happened really close to the end of the year, 12 in November, nine in October, 12 in December. It's quite natural that you have a significant carryover in the CapEx from 2022 that's gonna be paid now in 2023. That's why you'll see the leverage curve will follow a peak now compared to what we saw in the Q4, because the Q4 is also benefited by the seasonality of the products in the end of the year, and naturally by a term that's a little higher. You'll see in the first and second quarter that it goes up a bit, and then in the third and Q4s, it drops.
Basically, we still have room to be in a lower debt level, but with still having some carryover costs and uncertainties, maybe possibilities and opportunities to even have an additional expansion in the amount of stores. That's why we're being a little more conservative to have this level of debt that we expect to land by the end of 2023. Of course, having a cost of debt, there's a relevant part of the GPA that's gonna be paid now in 2023.
Yeah. Irma, the thing is about the payments, we have basically in the first semester, BRL 1.2 billion, which was a significant part in March and another in June, which adds up to BRL 1.2 billion. In the second semester, as Belmiro mentioned, we have the carryover from last year, with the payments of some delays, in certain stores. We're gonna be paying this in the second semester. You can consider about BRL 1.2 in the first semester and BRL 1.2 in the second semester. This is pretty much the payments flow that we have up ahead. This explains the leverage that Belmiro mentioned as well.
Would be the payments just to GPA, the BRL 1.2? Well, the BRL 1.2 in the first semester, BRL 1.2 in the second semester, and you still have a final payment in 2024. Exactly. We have BRL 700 million in 2024. Besides this, you still have the CapEx for organic stores, right?
Yes, exactly.
Now our next question is in English, and it came from Andrew Ruben, the sell-side analyst from Morgan Stanley. Andrew, we'll enable your audio so that you can submit your question. You can proceed, Andrew.
Hi, thank you. I just have a quick follow-up. Thinking about the non-food categories within the converted stores, how have the sales been trending versus your expectations? Do you have any updated thoughts about perhaps adding the non-food assortment within some of the core stores? Thank you.
The stores, not necessarily since the fact that they're converted stores, but where you have the location of stores with higher income, then you have a bigger share of non-food items. It's still very timid in our sector. It's different than what happens in other countries where cash and carry already like in the U.S., for example, with Costco, right? Where you have a real high share on these kind of categories of products, but it's also connected to our to the level of American income. But the opportunities here really are performing the ramp-up in some categories that we predominantly work with, although we had the inclusion of some items that are non-food. Some of the biggest inclusions in the assortment, we're more considering, we're considering the broadness of the brands and categories.
We believe there's an opportunity, and throughout the year, within this maturity strategy, it is possible that we'll have some tests and some trials with how to offer low prices with some non-food items as well, especially for higher income consumers, which is where we really believe there's opportunities in these stores. It's a secondary focus of what we're gonna be following now in this path.
Thank you.
The Q&A session has officially ended. Now we will pass the floor on to the company to their final remarks. Well, thank you all so much once again for participating. As I mentioned, Assaí has been following this path for growth. In 2022, we have an important step towards the amount of stores, the amount of people we're servicing in 2023. We are still in this investment phase, right? Growing and generating more jobs. Our expectation for 2023, of course, has challenges, obviously, just like every year. I think our team, our political scenario, the strength of our brand, and all of these factors give us a lot of reliance and confidence that the company will move towards delivering results consistently regardless of adversities that we sometimes have when it comes to the market.
We're pretty used to handling this. Whoever's been keeping up with the track record of the company, you'll see the level of stability in our numbers, and we can adjust in our business model. There's pretty good expectations for 2023. Once again, I just wanna thank all of the members, Daniela, Belmiro, Anderson, Gabrielle, for their participation in this earnings call. Once again, I wanna thank our team for their work, and I wanna highlight that for 2023, we hope you will be with us in this process for growth and guaranteeing these results. Thank you so much. The earnings call for the Q4 of 2022 at Assaí has officially ended. The investor relations department is available to answer any future questions you may have.
Thank you so much to all participants, and have an excellent day.