Good afternoon, ladies and gentlemen. Welcome to the second quarter results conference call of CVC. We have Mr. Luiz Fernando Fogaça, Chief Executive Officer, and Mr. Leopoldo Saboya, Chief Financial Officer and Investor Relations Officer here with us. This conference is being broadcast live. Go to www.cvc.com.br/ir. Click on the webcast link 2T 2019. Slides are available at our webcast platform. We have followed accounting practices in Brazil. They have been approved by the accounting committee. Before we start, let me mention that forward-looking statements are based on the beliefs and assumptions of CVC management and on information currently available to the company. They involve risks and uncertainties because they relate to future events, and therefore depend on circumstances that may or may not occur.
Investors should understand that conditions related to the macroeconomic scenario, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Luiz Fernando Fogaça. You may begin now, sir.
Good afternoon, everyone. We are pleased to start Q2 results of CVC. Let me start on slide four. This was indeed a very challenging quarter. There are no signs of improvement in the macroeconomic scenario. That impacts consumer confidence. In the case of tourism, more specifically, we have seen a very important player left the market with almost 15% market share. The offer was brought back to the levels we had five years ago. So there was a price spike, especially for trips taking place in the 60-day to 90-day timeframe.
We had a 9% decrease in June and a record occupancy rate of almost 85%, especially in the low season. Some northeastern destinations were mostly affected. Salvador, Recife, and Fortaleza, there was a 20% drop in supply. Price increases were about 60%. That impacted tourism, leisure, that are more price-sensitive. There is an indication on the part of domestic airlines of boosting 30 aircraft to be concluded in the following or in the next 90 days. So that would boost offer as of the fourth quarter. That may lead to stabilization of the market. Market estimates indicate that once these additional aircraft are in operation, we would boost the fourth quarter supply by 7% compared to the same period in 2018. In Q1 of 2020, that offer should be about 10% higher than Q1 of 2019.
On the other hand, the corporate segment, more or less price sensitive, benefited from the price increase. At CVC Corp, through Esferatur and RexturAdvance captured that increase. Grupo Trend boosted its bookings by 11% in the second half in Brazil. CVC Corp's strategy to diversify its revenue sources allowed us to maintain our growth because these businesses are supplementary and they impact differently, or they are impacted differently by the macroeconomic scenario.
Our focus was in providing services to customers that had purchased tickets from Avianca in the second quarter. We have addressed over 90% of these cases, about 180,000 passengers. 75% of those cases, passengers chose to book another trip or to maintain that credit for future trips. Our NPS stability at 84%, similar to the previous index before that economic turmoil. We feel confident because despite all the difficulties, we were able to provide excellent service to our customers.
Of all the 100 million future departures that we had released early May, we had about 82 million already incurred, and we are estimating future costs for remaining or pending cases. They have already been recognized in Q2 results. When you add those to the recorded costs in Q1, that would amount to BRL 92 million. On to slide five now. These are the main results the company had, [audio distortion] 2.3% growth in our reservations, 17% in our normalized EBITDA, and 13.9% in our adjusted net income. Cash generation was BRL 209 million, and seven days improvement of working capital, and minus two days in a pro forma. Because the acquisition of Esferatur improves our working capital. Through very good expense control, we are almost flat when compared to the numbers of 2018. Stabilizing 10%, we have maintained the same approval rates, but banks increased their approval rates.
By improving our working capital, we have improved our ROIC to 23%, 2 percentage points. We have reduced our debt even despite the acquisition of Esferatur and Acro. Argentina shows signs of improvement. We have a flat dollar reservation when compared to 2018, and we keep on increasing our market share. On to slide six now. We have concluded yet another strategic planning cycle with the support of specialized consulting services. We focused on market behavior and the digitalization, and trips, financial services, and new sources of revenue. We have improved our team in certain areas to implement these initiatives as of the second half. As part of that process, we have conducted a survey with almost 2,800 consumers of every walks of life in every region of the country.
Results indicate that CVC remains the leader in every social bracket and every age bracket with a very good margin, as you can see on slide at the bottom. On slide six, rather. On to slide seven. Let me talk about the acquisition we announced just last week. We have accepted a binding proposal from the Iberostar to acquire Almundo, including Argentinian and Brazilian operations. That would reinforce our strategy to expand internationally.
We are going to digitalize our tourism platforms, providing a better on and off experience throughout the customer journey. This is a modern brand and highly regarded in the Argentinian market. A platform that is based on state-of-the-art technology providing the latest technology, a true omnichannel alternative. The Almundo platform in Brazil will be the basis of new platforms for Submarino Viagens. CVC Corp will double its presence in Argentina, reaching the 16% mark. On to slide eight.
Let me talk about the digital deliveries. In the second quarter, we had an innovation marathon called Hackathon CVC. 27 hours straight of implementation to provide an online product for exchange programs . We conducted the first Festival de Data CVC Corp. Delivered yet another digital product, the Android app including hotels, and iOS, the aerial portion. A new hotel platform and a new aerial platform with 10% penetration rate in the mobile.
In the case of CVC, we have cross-selling on app such as insurance in iOS and also Android. On to slide nine. These are the quarter highlights for both Brazil and CVC Corp. Here we had 11% growth in bookings, mostly from the corporate segment. Net income or net revenues were up 7%. We had an EBITDA increase of over 20%. It has been normalized, excluding one-off events that I have already mentioned. We include Argentina in CVC Corp.
We had less increase in bookings because of that challenging situation. But we had similar growth in EBITDA in adjusted net income, including operations in Argentina. On slide 10, let me talk about the results of this semester. We had double-digit growth in every key indicators. I will turn over to our CFO, Mr. Leopoldo Saboya.
Thank you, Fogaça. Moving on with our results presentation, let me first focus on the results in Brazil. Let me start by analyzing our net revenue in Brazil. It reached BRL 361 million, BRL 23.5 million better than the last year, a pro forma increase of 7%. The 10% take rate for the semester is down about 70 basis points for the quarter, and there are three reasons behind it. Number one, an increased mix in bookings from RexturAdvance and Submarino Viagens. These are units, as you know, they have lower percentage take rate. That individual mix effect accounted for 30 basis points out of those 70 basis points. We have also included the one-off Avianca effect. The estimated impact was about 25 basis points of those 70 basis points. And finally, a 10 basis points impact as to international pricing strategy change for Trend and Visual units.
Let me point out that this estimated take rate decrease for the second half of 2019 related to Avianca closure is about 45 basis points for the period. Let me explain how we made that calculation. The difference in conditions given by Avianca versus the weighted average of the market that we had with Avianca. On slide 13, let me talk about operating expenses. Let me point out first that recurring operating expenses, including fee [boleto], grew by only 0.3%, almost flat in the quarter. A major reduction in the growth rates we have had recently, as you can see on the chart on your right. We were at 15.6% in the same group of accounts in late last year, 13.7% in the previous quarter, and we are down to 0.3%, as Fogaça said.
This is due to what we had to do, and we had to be very stringent given the challenge scenario, both in the market and also in the economy. We did that with only 2.5% increase in G&A below inflation, and selling expenses grew by 5.5%. On top of that, we have normalized the outstanding amount and the losses incurred. Let me explain that in the following slide. As you can see, the yellow line, that is the PDV compared to our own growth. It is very similar to historic rates. That provision is first looking back in very mature seasons that would remain flat. You have a more perspective view of more recent seasons that have been performing satisfactorily and even a little better than what we had last year.
Let me point out that at the end of Q1, as we have stated, we have become the first approver. That is what we call clean water because we have less delinquency rates. Let me point out that the company has been improving its processes and systems related to credit and collection. I must say that this 11%, 12% historic track record, every time you compare that to financial institutions of other retailers, especially electronic equipment, in the case of tourism, about 15% of production ends up being canceled even before they board due to delinquency rates, which would mitigate losses of that portfolio. Finally, our own financing, which is the line at the bottom that moves away from 5% in early 2018, is at 10% now. It had a reduced margin when compared to the previous quarter and remained at 10%.
Let me say that the approval level of our partner finance institutions increased by 3 percentage points, and CVC operated as the first approval institution in 1 percentage point of our 10%, which is our own financial institution when compared to total sales. As to the EBITDA composition, our normalized EBITDA at CVC Corp was BRL 126 million for the quarter. That means a 22% increase when compared to last year. Semester, that growth was 17%, reaching BRL 329 million of EBITDA in that period. The margin EBITDA was up 4.3 percentage points. Let me point out that these results do not take into account the one-off effect of BRL 182 million of reimbursements. Same comment applies to the next slide. That effect was not taken into account.
In this second quarter, our adjusted net income was up 5.2% when compared to the previous year. We have an increase in net financial expenses, and more expenses were caused by the PPA. That was allocated to an M&A crisis, 7 percentage points greater than last year, mostly because of the Argentinian companies, because we did not have them last year. In Q1, pro forma growth was 1.9, reaching BRL 150 million. On to this next slide, let me talk about Argentina. The first highlight is that despite that decrease, it is smaller than the market average. We had a market share gain in the intermediated tourism market. Despite the fall in bookings, let me say that losses remained almost stable in the first semester, and the reservations or bookings for July are almost at the same level of July 2018 bookings. The market is getting back on track.
On the right, I would like to highlight the growth in local demand. Real is a strong currency, or even dollars . It is important to show you our performance in local currency, which is pesos, 45% bookings were up, and EBITDA grew 32% in this period in Argentina. Let me summarize all the results of CVC Corp. Let me just point out a couple of indicators. Our normalized EBITDA performance for the semester, it reached the 17% mark as a whole for the group, which is a robust result given the macroeconomic scenario that is challenging. On the next slide, we have cash generation and working capital. These are very important indicators at this point in time. Let me first point out the operating cash generation of BRL 363 million for the semester, well above numbers both 2018 and 2017, as you can see on your left.
For the semester, we have accrued BRL 209 million, BRL 159 million was our cash consumption, and BRL 63 million in 2017. That performance was possible because of good management of working capital. We provide advances at a smaller degree. We have adjusted the management in Submarino Viagens. On your right, analyzing that by number of days, and we have done that since 2017, the company has improved seven days between 2018 and the current quarter. Pro forma, that number would be an improvement of two days. An important improvement nonetheless, because businesses in Argentina that were not included in 2018, they both demand the same amount of working capital. On to the indebtedness slide.
Let me point out that we have reduced our leveraging by 0.26 x the EBITDA when compared to the previous quarter, and we have elongated our debt profile with the issuing of debentures, as you can see on the chart on the right, at the same cost practically we had before. Financial expenses were up 23% in Q2 2019. Given less financial revenue because of those advances to smaller suppliers, and also a higher average debt of about BRL 600 million, increasing, as a consequence, our debt service by BRL 8 million between these two quarters. And finally, our ROIC, it improved by 3 percentage points between Q1 and Q2. As a result of the invested capital, it was reduced a little over BRL 333 million. That was the improvement in our working capital. Having said that, let's move on to the Q&A session. Thank you.
We will now have the Q&A session. To ask a question, please press star one. Robert of Bank of America.
Thank you for taking my question. Luiz Fogaça, why is it that you expect more pressure on the second semester of the year?
Hi, Robert. How are you doing? We are talking about Avianca. It will be 45 now, basically because in Q2, departures haven't been completely captured. So the effects will be on the Q3 and Q4, and we will have a bigger mix of Avianca in the second half of the year, especially in Q4. What's your take on the long term? When do you think it will get back on track? That will depend on the mix and channels. When you look at it individually. Favor CVC within domestic and international segments.
But in a high volatility scenario for the exchange rate, given the reduction in supply domestically, we have seen an increase, much bigger in the international. And we see growth in the corporate segment more than leisure, but the take rate is smaller there. When you look at the problem individually, we do not see major changes in companies and products, but the channel mix and the segment mix will fluctuate depending on external variables, which are very hard to predict.
Thank you. That was clear. About Almundo, it makes all the sense in the world. But how are you going to maintain your technical team with the Almundo platform? How long would that take to replace the CVC travel platform? What would be the new features you are thinking about, you are considering implementing?
As to the personnel, the land trip that is part of the book or the team that we acquired, they also have a technology team. The Argentinian market is filled with good talent. Almundo started out as a startup. What we have to do in the next 90 days is the due diligence that will take into account tax and accounting characteristics. At the same time, we will be analyzing the teams, the infrastructure. We are aiming at retaining or maintaining the top executives. We believe that CVC is already a market leader. We have consolidated the market, so we attract talent. In Argentina, we had two companies already among the top companies in the country, and we are now adding yet another leading company, and it has a very B2C appeal, very technology-intensive company.
We have a group in Argentina that is almost at $1 billion, a very robust company with state-of-the-art technology, with very good market conditions. By combining all three companies in Argentina and the Brazilian headquarters, we have everything in our favor, not only to maintain the teams we have there, but rather we will attract more talent to help us even face challenges in Brazil. As to the platform per se, we have conducted a pre-due diligence in these past three to four months. We even hired a specialized company to conduct that kind of work. It is almost a plug-and-play solution, just like we had Submarino Viagens. We had a website, an app. For the mobile world, and they also have the same kind of development. Almundo is already present. It is already operating in Brazil. They have all those tools available in Portuguese.
The challenge in Brazil, let me make it very clear, we are in a growing trend. We have 130 people in our digital team, but by mapping out the challenges we have ahead of us, we have an omnichannel strategy for the CVC. We will have to bring that number up to 200 people. That will be a challenge to hire 60, 70 people in technology at a time in which it is a very heated market. When you bring in 150 people from Argentina, we can join forces and allocate resources in Brazil, maybe to work for cvc.com. We have just concluded a loyalty program with the Santander Bank. We will have to have a dedicated team, and we are negotiating other strategies that will require dedicated teams.
As to the CVC brand, which stands out, we believe we will have to assess what are the features we have in our Almundo platform that could occasionally be used in Brazil. 100% in Submarino Viagens, and 100% in the other two companies we already own in Argentina. We would have to develop more modern systems, trying to adapt what we have in Brazil in other areas, but ARI is already ready with solutions for the Argentinian consumer. It is a totally SAP-ready platform. By year's end, we will be able to implement this platform to Ola and Bibam. Also starting that challenge with Submarino Viagens that will be concluded probably in early 2020.
That was very clear. Thank you.
Ruben Couto from Santander would like to ask a question.
Good afternoon, folks. Let me go back to the take rate. 45 for the second half. Maybe it is Avianca ranked. As changes happened, do you believe there would be any take rate effect in the other partners? Almost flat in the operational expenses. Is it because of cuts? Thank you.
Good afternoon, Ruben. The take rate. The impact in the market is price adjustments. We're always concerned about the commercial aspects, which is also valid, but what actually affects the market is the price shift. So when an airline changes its price list, let me put it simply, that would ripple through every seat on the plane, corporate and leisure alike. Since you have not enough supply, you end up not being able to allocate business travelers early in the day, late in the day, and you end up filling an airplane during the day, which would be a leisure time, which is usually 50%-60% occupancy rate. Business travelers are less sensitive to price.
It doesn't make any sense to renegotiate with the airlines. The three domestic airlines were very supportive to re-accommodate partners in April, mostly. They were reassigning passengers at no cost. When we began to deal with customers at stores, where they had to purchase new tickets so that they could get on a plane again, they provided us with a differentiated treatment. That's why we have maintained that level at BRL 82 million. Instead of BRL 100 million departures in the future. That we had a future departure worth BRL 100 million. We were very transparent, and we said that upfront. As to expenses, we still have a lot to do to capture synergies and systems in the Trend, and even at Visual. These are companies that have been acquired for over a year, but we haven't concluded that integration cycle yet.
In the case of Argentina, it hasn't even started. But it gives us more visibility. We're looking at March and April. The scenario would be challenging, and we did our homework. The entire team was very committed and helped out. We have an initiative led by Leopoldo, MPV. But that's not the main reason behind that impact, because all these initiatives have been mapped out. We're beginning to capture them. There's a capturing curve that will rise towards the year's end. But we kept on doing what was strategic. We kept on hiring people for strategic positions that are directly connected to our growth strategy. We didn't fire anyone, and we kept on investing in our CapEx. But costs, when you peep down at costs, of course, you can also optimize things.
We do have some initiatives that started out late last year to automate some of the processes in our service center. Pinheiro, our operations director, started out back in October. This is a longer project. They have resulted some good results. But there are still some opportunities as of August to year's end, and we would start earlier next year, different from that level we had in 2019.
Thank you.
Marco from Itaú BBA would like to ask a question.
I have two questions. First is about working capital. Looking at the pro forma and known pro forma pictures. When you look at the pro forma point of view, would it be flat year-on-year? My second question. To explain the take rate issue in the previous question. Those 45 basis points. Take rate effect is a calculation based on negotiation differences you may have with suppliers. Is it right that if all variables remain the same, is this something that will carry over to next year?
Hi, Marco. Good afternoon. The calculation of Avianca Brasil's impact takes into account different rates. It also takes into account how much was transferred to price or to margin. You are right in your assumption. That level in the second half will be the next level for the first half of 2020. In other words, we would be starting with a take rate of one-off event that would be smaller than that of 2019. On the other hand, as I have said before, we starting next year at a more optimized expense level as a consequence of all these initiatives. We have concluded the strategic planning cycle back in June, and we identified several revenue opportunities, segmentation, cross-selling, and B2B channel.
These initiatives will help not directly into the take rate, but additional sales, costs optimization in our commercial department. In other words, we have mapped out several initiatives to help us mitigate this well-known take rate effect.
Marco, let me address the first question you asked. If I understood your question correctly, you would like to know what would be the pro forma effect in the accounts receivables. The events you see in Q2 last year, you have 78 pro forma days for Q2 2019. We would have an improvement of three days in accounts receivables. That would translate or that would talk to the 97 that is pro forma for the Q2. Does that make sense?
Yes, it does. Thank you. That was very clear.
Let me talk about working capital. Still, we have been talking to you for some time now.
This year, we have a very clear target. The company as a whole understands that. Of course, when you introduce a new metric, that becomes everyone's focus. That weekly meeting we have, we discuss working capital for every business unit. That is present in everyone's head or minds, those that make decisions on a daily basis. We have implemented a couple of things that have not been mapped. They would require systems changes. These changes have been made, have been tested, but in a challenging economic environment. Because of less supply, we postponed that to the second half of the year so that we would not impact sales at all, no matter how small that impact would be. Just like I said last week, these things that affected working capital and cash flow were one-off events.
These problems no longer exist, and that has helped us in the first half of the year and for the second half of the year. Once we start implementing those mapped-out strategies, that would help even more the company to generate more cash flow and working capital.
That was very clear. Thank you, Fogaça.
Olivia from JP Morgan would like to ask a question.
Good afternoon. Thank you for taking my question. Let me focus on the online business. Is there any particular business as the main driver for your online? Let me address the acquisition Argentina. Where would synergy come? Especially when you take into account the online corporate segment in Brazil.
Hi, Olivia. Good afternoon. Let me try to address your question. I could not hear your question completely. What helped us the most in bookings was the corporate segment.
Within that segment, RexturAdvance, which would be the eldest son that joined the company in 2015. We have concluded that cycle, that maturing cycle. It had already a robust B2B platform. That was the reason, the main driver for that acquisition. You have a team that has been performing well for quite some time, and that helped us improve our average ticket in the corporate segment. We have growth, not at the same level, but still growth from Esferatur. These are supplementary. One is stronger in domestic, the other one stronger in international flights. We have Rextur, a very robust system that has already been implemented at Esferatur. Maybe kicking that off in September. Once we have that new system in effect, Esferatur will be making reservations more easily, will be finding best tariff prices with no human intervention.
The online business in Brazil, small operation, but it has a significant growth. Biblos has shown interesting rates. In Argentina now, the highlight would be our recent acquisitions. Two companies that we're beginning to start to work with them. We have just implemented a new matrix structure in Argentina. That happened two months ago. The systems are still different, but we're still negotiating with trade partners to improve those conditions for both companies. Very often, these conditions can be captured, but they will require changes in the system so that we can offer the dynamic package, that consumers can see the total price, they know it's cheaper, and there's no conflict with the revenue management strategy on the part of airlines. With Almundo, which has better take rates, they already have that dynamic package. They're doing this for quite some time now. They do have physical stores.
They interact with consumers from end to end. Also because they already developed a system for franchisees, for resellers. They already give out rates, conversions, and prices in total. We understand that a single platform that can capture all the potential of products, and it can connect all the best deals when you bring in three highly technical teams from Argentina would then have a profitable platform in Argentina as the economic situation or once the economic situation improves there.
What about online in Brazil? Are there any of the three businesses that could stand out? Submarino, Biblos, or cvc.com. Would that growth be homogeneous, or would one of them stand out?
At this point in time, cvc.com grows the least because it has the oldest platform. Go to the app site or the app itself. We're always introducing things at Biblos because we have a strategic partner there.
They have placed all their bets on our platform and our content. Every development there had that brand. That's why performance has been very good. For Submarino, which we have more freedom for the brand to take risks, to learn more. At CVC, it's an omnichannel. Consumers survey using the app, the mobile, or the desktop, but in the end, they end up purchasing their package at the store. We can't measure that. We're studying several initiatives in that sense. One of them I've already talked about, let me point that out. About a month and a half ago, we hired a very internationally recognized company to put together a single and structured database for all our companies.
It's a long-term project, of course, but by year's end, you would have a single database with a single customer code. Then we would be able. Well, that lead was generated at a store, at a mobile, at an app, or an exterior. We would then be able to track that lead throughout that customer experience. From that kind of information, from that point on, we would be able to detect behavioral trends so that we could provide or design a more customized product. At CVC, we've already conducted that discussion. What would the customer journey be, connecting the dots between the digital and the physical world? We have that mapped out. We have the timeline. We know what the investments are, and we are putting together a team. We're beginning to deliver that end now in the second half of the year.
We'll have that dynamic budget concluded by year's end. It works for a store today. You do some kind of survey for an air ticket. If you reduce that price, send a notify to the franchisee to inform the customers. The second step, once you have a tool in mobile or in the app, you can inform customers directly, and we also inform the salesperson that can also interact and provide any services, and we'll be connecting both worlds. Let me remind you that once the sales rep starts the interaction, we're going to guarantee their commission, no matter how it ends.
That was very clear. Thank you, Fogaça.
Luis Felipe from BTG Pactual asked the following question. "Good afternoon. I actually have two questions. The first one is about the own desk. How would that own desk be involved? Because the banks have more appetite for credit prone, so to speak. My second question about e-commerce, what initiatives do you have in the pipeline to maintain traffic within the platform?"
Let me start with the second part of your question. We have several initiatives, including digital marketing. We have a digital marketing team, a new team dedicated by brand, one for CVC, one for Submarino. Last year, we replaced our CVC agency. We've already modernized our communication strategy. Last year, we had 2%- 3% investments in marketing digital. Today, we are at 16%- 17% in the first half of the year. We'll be investing over 20% in the year. When you move on to the digital world with more information, you can be more assertive, and investments are more predictive.
Database will be very relevant so that we can have a more dedicated offer based on history information and behavioral information. Of course, these ideas have to mature. In the case of e-commerce, just like I said a while ago, it doesn't matter where the sale takes place. If it's online or offline, it doesn't make any difference. We have to be present no matter what, at every step of the way in the consumer's journey. Not even when they purchase it. The trip starts when they begin to plan that trip. They search the internet, and we want to be, or we will be present at every interaction point with CVC or Submarino or the Almundo brands, including the sales process. Also during the trip, we'll have an app available to give that consumer travel tips so they can buy concert tickets or transportation.
When they come back, we can help consumers share that travel experience. Friends and relatives, everyone loves to share those moments. There are several things we have mapped out, and we are already working on it. We are hiring people that are highly experienced to help us out in that sense. Over to Leopoldo.
We have already said before, time and time again, that we are concerned about our debt from 5 to 9 to 10. We would like to be aggressive to try to offset macroeconomic problems, and that we would be more risky in terms of credit concession. Again, we want to provide an extra offer. If it is an incremental sale, we make that available with a credit score that we believe is appropriate, that can help us get not only incremental sales but a profitable one.
Banks, on their part, have their own strategies, and we respect them, and they adjust their credit policies. At a point in time, it was reduced, and we had to do more on our part. We had to, not only because we were more aggressive, but because of the change in the bank policy. As a sales percentage, that number would increase. In Q1 results, we could go even to 15%, not as a target, but we knew that it was everybody's concern, given the nature of the operation. You have an implicit risk. We would never go beyond 15%. We were at 10%, 11%. We are beginning to make that first approval. It is not our core business. We just want that to have an alternative and to have market costs at the first approval. That would be a max or a maximum, not a goal.
Maybe it was regarded as an objective, and there was some noise in Q2. As you can see now, it did not go to 15%. It went down to 10%. Not because we increased our rigor. We have maintained our score, our policies. But banks, on their part, when they improve their approval rates. Financial team conducts regular meetings with partners to improve the quality of the information. They have approved more, so that helped us in turn. It is a self-adjusting cycle. Are we going to approve less in the future? No. Whatever we believe it is good credit policy. If we maintain minimum profitability, we will keep on doing the same thing. I think Fogaça has already covered or has already answered your question. But let me add to his answer.
The first thing we did was we wanted to have an internal financial company with a lot of rigor, a lot of internal controls, and that is our main focus for the team, so that we can perform the buffering role. The activity performed by partners could take place as smoothly as possible. This would be more of a financial services division rather than a financial services desk. That is part of our strategic planning. That is one of the highlights, one of the decisions. This is a very good opportunity. It has to do with credit cards, with partner banks, other means of payment. We are looking at this issue not only from the financial division per se. It is not going to be a replacement of other means of payment, but a more expanded profile of financial services, which is part of our strategy. Thank you.
Thank you, Leopoldo and Fogaça. The answers were very clear. Richard from Bradesco asks the next question.
Good afternoon. My question is the demand in stores. Of course, Avianca provided a negative impact. There was less flow and less competition in the quarter. Can you help us understand what was the main driver behind that impact? Are you improving your conversion rates towards the end of the quarter, more specifically in June?
Hi, Richard. You're right. We had two effects in stores in Q2. The number one problem was not conversion, it was flow. There was some fluctuation in conversion rates, but we had major flow drops. But we have boosted our marketing campaign resorting to the model that traveling is good for your health, that provided another alternative that helped us bring in new blood in late June. Everything we see about the economic scenario, unemployment rates are still high.
The industry is not growing. Combined with high prices, consumers of leisure travel keep on searching the net. They resort to online activities. If prices are high, they don't travel, period. We have been offering promotions, but that may pick up once prices come down to the levels we had in late Q1.
Thank you. Let me just ask a follow-up question. The chart on page seven about the gross and net bookings growth. In Q3, we have smaller reimbursements and cancellations that would impact positively bookings. Is that right or didn't I understand that properly?
Yes. These are two things that are connected. We wanted to show not the number per se from 2% to 10%. We wanted to give you a visibility of the magnitude of cancellations. Reduced sales, reduced flow, prices are higher. The economy is not helping.
When they come to the store, they cancel and they don't rebook it. They just maintain the credit. That can be accounted as a new sale once they confirm their new destination. So there's a very strong impact in May and June and still in July, which you cannot see yet. But as of September, we would have cancellation levels similar to those we had seen up until March, which is a very stable level. There were no major changes there.
Actually, just a final question. Guidance of the Avianca impact of the second half.
Let me just double-check. Is it 45% or basis points, basis points?
For Brazil.
Yes, it is Brazil consolidated because the impact happens, Rextur, Submarino , and CVC.
Thank you. That's perfect. Thank you.
Press star one to ask a question. Mr. Ruben Couto from Santander.
Questions about financial services drop. What's the number?
BRL 42 million in the second half.
Financial expenses?
Just a second. It's credit card receivables. It should be with the debt services expenses. I think it was separated.
I got it now. Thank you.
Press star one to ask a question. I'll turn over to Mr. Fogaça for his final remarks.
Thank you once again for attending this results conference. To Bodo, our IR team, Pedro. We have just hired our new IR. I think you've met him before. Vitor Pini. He's starting on Monday. There'll be a transition phase with Pedro and Enrique. They've been doing a fantastic job in our IR department. We have very good things in the company. We're bringing in reinforcements for strategic sales. One of them is IR, Vitor Pini, a very talented professional who will be 100% dedicated to IR. Rest assured that Pedro and Enrique remain in our team. They will be taking over new challenges. Thank you once again.
This concludes today's CVC second quarter 2019 results. Thank you and good afternoon.