Good morning, ladies and gentlemen, welcome to the conference call for Dexco's results for the second quarter of 2023. This conference call is being recorded, and it may be seen in the company's website, ri.dex.co. This presentation is also available for download. You can also listen to this call in English. If you'd like to, you can click on the globe icon on the lower right corner of Zoom and then choose English. You may also mute your original audio for a better hearing experience. We'd like to inform you that all participants will be in listen-only mode during the company's presentation, and then we will have a questions and answer session when further instructions will be given. Before we continue, I'd like to underscore that prospective statements are based on assumptions and beliefs, and on currently available information for the company.
These statements involve risks and uncertainties because they refer to future events and therefore depend on circumstances that may or may not come to pass. Investors, analysts, and journalists should take into account that any events related to the macroeconomic scenario, to different industries and other factors may make these results materially differ from those expressed in the forward-looking statements. We have with us in our conference call our executive directors and the investor relations team. We will now pass the floor to Mr. Francisco Semeraro, who will begin the presentation. Go ahead, sir.
Hello, everyone. Good morning and welcome, and thank you for being here for another one of our earnings call. It's a pleasure to be here with you. On Slide 3, We start our presentation.
Here we have the highlights for the second quarter of 2023 and the first six months of the year. We see some improvement signs in the economic scenario, but still some small effects, considering what we saw in the last few months. Our markets had a slight improvement, improved volumes, but they're still below 2022 levels. This improvement in the market and the wood division's sustainable development have offset some of the structuring initiatives in the finishing divisions, especially metalware, which led to a reduction of 22% of our results versus the second quarter of 2022. Our first half of the year had an Adjusted and recurring EBITDA of BRL 701 million, disregarding results from LD Pulp.
This operation has had full production in the second quarter of the year, which contributed to our pro forma EBITDA with $150 million the quarter and $284 million during the first half of the year, which makes our pro forma results $984 million this year. Slide 4 shows our cash generation. We started some sales deceleration initiatives in this quarter, recomposing our forestry bases, and we had higher expenses than financial debt, due to the part of our gross debt connected to this CDI. With some diligent management CapEx, we were positively $60 million in our sustaining cash flow. In the first six months, this sustaining cash flow was negative $57 million.
Our procurement levels made the company finish the first six months of the year with a 53-day cash cycle. We maintained that proportion of working capital to net debt at 18%, significantly below pre-COVID levels. With project, we spent 312 million Brazilian reals in our investment cycle and other initiatives, with a total free cash flow of negative BRL 369 million this quarter. Looking at the impact of these results to our debt, we will continue on Slide 5.
The higher cash consumption due to the investments announced in July 2021 and carried out in the last few years, plus payment on interests over our own capital, announced in December 2022 of BRL 249 million, took us to a leverage of 3.1 x, which is still in an appropriate level for our operations. This quarter, we reaffirmed our Fitch ratings with our national and global ratings at BB+ and AAA, respectively, which gave Dexco an initial corporate rating of AAA, which reflects the company's solid competitive position. Very happy about these results. Continuing with our divisions, we will move to Slide 7. The data published by Ibá show that in the second quarter of 2023, sales went down 11% versus the second quarter of 2022.
The domestic market had a reduction of 2%, and the foreign market is even more pressured, with a reduction of 49%. We had an increase of 44% in MDP sales. During the first half of the year, the industry had a reduction of 10%, out of which 2% were in the domestic market and 45% in the foreign market. We continue with Slide 8. At Dexco, the wood division results were a highlight, which once again proves our resilience with a very competitive market scenario. Focusing on customer support made this division finish the quarter with superior sales performances than the rest of the market, which maintained our market share for the first six months of the year.
Great management for our assets and the, and the panels industry allowed us to have excessive wood sales, which reduced our costs. The results for this division, despite a reduction of 8% in volumes, had an increase of 32% in the Adjusted and recurring EBITDA in comparison to the second quarter of 2022. Year-over-year, the division went up 9%, concluding at BRL 676 million in Adjusted recurring EBITDA and 28% margins. Although we made use of the high wood price market, our priority is to maintain our market share and to continue well positioned in these markets. Slide 9 discusses our dissolving pulp results. This quarter, after the downtime we had at the beginning of the year, LD Celulose or LD pulp, had a full occupation operational performance with high quality.
Although dissolving pulp prices reduced during this time, this was offset by improved costs, which led us to a recurring Adjusted EBITDA of BRL 308 million above the previous quarter, and a margin of 51%. Dexco has a 49% stake in this business. Considering this proportion, this division's results would add BRL 150 million to the company's EBITDA this quarter, and BRL 284 million for the first half of the year. We're happy about the results of this new operation, its quality levels, its productivity, and we're focused on reducing production costs as much as we can. Continuing with construction finishings on Slide 11. The construction materials industry had a reduction of 3% on its gross revenue, but it performed better on basic products, according to ABRAMAT.
Looking at the metalware division on Slide 12, the initiatives we started in the last 12 months are showing good results, including an increase in our market share during this time. This was not enough to offset the adverse market scenario, which led to a reduction of 23% in volumes sold versus the second half of 2022. Continuing the structuring initiatives that we started in the previous quarter impacted our expenses, which reduced the division's adjusted recurring EBITDA, which was negative BRL 3 million, but positive for the first half at BRL 19 million. The company this quarter closed the ceramics unit in Queimados to leverage its productivity without losing its production capacity. The tiles industry is discussed on Slide 13. It still is seeing major reductions in demand, but lower than in the first quarter.
According to Anfacer data, ceramic tile sales went down 16% in the first half of the year. We saw a slight increase in production, which led to our installed capacity utilization rates to go to 68%. The tiles division, the ceramic tiles division, had an improvement in market share, leveraged by commercial initiatives. Despite that, its sales volumes were 20% lower than the second quarter of 2022, and 28% year-on-year. We were able to have higher plant occupation rates and reduce our fixed costs. We had positive results from the second quarter at BRL 8 million Adjusted and recurring EBITDA, and BRL 6 million for the first half of the year.
The company took another step in optimizing its plant, reorganizing its industrial assets in Criciúma, adapting it to market demands without harming our clients. These structural changes in the last few months and the expected improvement in the markets where we work, make us confident about how these results will evolve the next quarters, considering the operation is more resilient and agile to respond to the market. Continuing with Slide 15. On ESG, this quarter, we published the company's integrated report, consolidating our practices related to ESG. This is the fourth year in a row in which we're publishing this kind of material that shows how Dexco is generating long-term value through its operations and practices for all of its stakeholders.
As per usual, the document had details of the, the company's main initiatives, such as the new culture season, our way of being and doing, and new behaviors that guide the company's principles. We also revisited the company's material topics, which are considered sensitive, where we intend to direct our efforts to make significant change in the company. Considering our sustainability strategy, this is an update of our goals and commitments. As a highlight, we reached 30% of women in leadership positions and accumulated BRL 134 million invested in innovation projects. We also have a positive carbon balance between 2020 and 2022, capturing over 1.6 million tons from the atmosphere during this time. Our goals for 2025 have been set, except for our carbon balance, which we intend to reach until 2030.
It's important to tell you that we defined in 2022, our social responsibility directives, published in details in our report. In a company like Dexco, with a structure of over 13,000 employees and 19 factories in Brazil and Colombia, using our resources strategically to encourage a community development is essential for the company's sustainability. We believe that bringing ESG to the center of our discussions is an action that goes beyond a good practice. It allows us to anticipate risks and opportunities in our industries and with the products that we sell. Let's continue with Slide 17. The company announced yesterday that it will conclude the investment plan announced in July 2021. Investments of about BRL 300 million were reduced to BRL 1.8, will be increased, excuse me, to BRL 1.8 billion by August 2023.
We will see significant reductions in investments in 2024 and then later in 25 and 26. This will allow us to continue our investments to modernize our assets and expand our forestry base and also, perfect our own process. Let's continue with the next slide. I'd just like to conclude this presentation by telling you a bit about our expectations for the year. The first half of the year was more challenging than we expected in the macroeconomic scenario and specifically, in Dexco's industry. During this time, the wood division's resilience and agility allowed us to sustain results as we make structural changes to metalware, ceramics, and ceramic tiles, which will be necessary to correct, the excesses from the growth years we had in the last few years.
The second half of the year is usually favored by a seasonal pattern, and there are important macroeconomic measures and reforms. A reduction of interest rates is expected, this will support an improvement in the markets where we work. Although we believe that there are factors that will strengthen us in the next quarters, we are focused on continuing our internal initiatives to give our divisions resilience and agility as we recover our market. We continue to dedicate our efforts to controlling expenses and costs, seeking cost opt-optimization and a better product mix. We're also strengthening our brands in the market, which will involve operations and commercial execution, this has already been paying results in the current quarter.
All these processes will be supported by digitalization to the recent and successful implementation of our RB system, which will allow us to have better business integration and agility. Finally, we are still excited about the first year of our pulp operation and its potential results for Dexco. We will now open up for questions. Thank you very much for your attention.
Thank you. We will now begin the questions and answer session for investors and analysts. If you'd like to ask a question, please press the Raise Hand button. If your question has been answered, you may remove yourself from the queue by clicking on the same button again. Please hold while we poll for questions. The first question will be asked by Mr. Caio Greiner from BTG Pactual. Go ahead, Mr. Greiner.
Hello, good morning, everyone. Thank you for taking my question. I have 2 questions. First, referring to selling forests, it seems to be another quarter where the wood division is saving your results. This has always happened, but we're still having trouble understanding the difference between selling wood panels and selling forests in your portfolio. We'd like to understand how sustainable these sales have been. The wood sales that you're performing right now, are they exactly what you're not using for the quarter? Have you been able to sell any excess from what you're not using? Are you selling anything that you left behind that you haven't used in previous quarters? Are you accelerating sales to offset for a weaker result?
Really what I'm trying to understand is how sustainable these results are for the wood division and how immune it is to these reduced demands from the wood panels market. My second question. In finishings, it was interesting to see the number of initiatives that you had to recover your market share, and this is in line with what Raul mentioned: training new sellers, moving your price closer towards the competitions. I'd just like to understand if these initiatives will continue contributing to your results in the third quarter. We understand that volumes should grow due to seasonality factors in the third quarter, but do you expect above-market recoveries in this quarter, that is, market share recoveries? What are you considering for the future? Thank you.
Caio, this is Antonio Joaquim. Thank you for your questions. Raul is also here, who works with Deca Tiles and Adaljio from the wood division. May add some information if they'd like. To answer your first question, I think we've mentioned this in previous calls. First, we don't have a surplus or an excess of forests, in comparison to our full capacity. A few years ago, we made some important sales of forestry assets to Suzano and to Bracell itself. We have enough forests to supply our factories, and that's sustainable. We can't produce more than our nominal capacity. Since right now we are operating below our full capacity, we sell exactly as you asked, what we have not been consuming every month. That's what we've been doing. Of course, we don't sell it every month.
It's accumulated for a couple of months, and we always have our eyes on the next few months, but we are selling the excess that we have not used, which is very positive. If you look, Caio, at this distribution, if you look at the last few years, for example, to see how our wood sales have been doing, you'll notice that volumes are very similar. There's a variation of 10%-20%, but yearly volumes are very similar. The big difference is that we are having very good prices. The results have been very different. If you look at pre-COVID levels, where prices were 25% of, of what we are, we're at 4 x that price level. As I explained many times, and I'm sure that you've heard, that this is not a short-term change.
I don't think that prices will go up indefinitely, but these price levels are excellent, very good, and they'll help us to continue this policy of controlling and maintaining our market share and operating carefully without too much of a hurry, just by selling excess wood. We want to keep it at optimal capacity. It's very positive right now. Dexco is the only company in the forestry industry that's doing that right now. It's the only one that can supply 100% of its forestry needs. It's sustainable. What can happen in the future is that if the market recovers, we're going to produce more, and there will be less wood. Then we'll add value to that with our wood panels production. If the market continues as it is, we will continue this policy of selling without advancing.
We're not advancing in future forests. We don't have any excess from the past. The volumes we sold have been absolutely normal in the first half of the year. Absolutely normal. I don't know if Adaljio has anything to say. Go ahead if you'd like. Raul is also here. He can tell us a little bit about Deca and RC. Of course, we're going through a difficult moment in the market right now. You must be seeing that we have high inventories. Our focus here in the first quarter was to have an internal turnaround. Many initiatives, teams were changed, all kinds of initiatives. We have new initiatives with clients. We're working with go-to-market. We have specific internal projects.
There are dozens of them that I can't really go into detail, but I think overall- what we expect is that from now on, these projects will not only be projects that you're changing now and looking at every month, but Raul can tell us a bit more about this for you, because I think it will clarify further questions.
Thank you, Antonio, and thank you, Caio , for your question. Exactly as you said, we're starting this journey, as Antonio said, we made some changes to our commercial leadership. We started investing much more in points of sale. Our product sales are very technical, so everything we started in February, you know, with prices, the competitive setting, aligning with our competition, it was absolutely well received, and along with some structuring capacity changes, we're starting to collect the results.
Market share has advanced, so we brought it back to levels that we believe are correct, but we do have some space to advance further and bring back what we had in the past, especially in ceramic tiles. I think we can expect sustainable results from now on, advancing on this commercial front.
Thank you.
The next question will be asked by Rafael Barcellos from Santander Bank. Go ahead, Mr. Barcellos.
Good morning, everyone. Thank you for taking my questions. Just to follow up with the wood division, just to make it clear, selling forests are not compromising or affecting your costs and profitability for the division, right? The second part of my question is, how do you see this for the third quarter? Normally, in the third quarter, we have stronger seasonal patterns, stronger demand.
I'd just like to understand if we're going to see that typical level this year or if you believe it will be different. My next question is about Deca and Ceramics. You've seen the company adjusting its capacity for new demand, but you're also getting new capacities from the investment plan you announced in 2021. I'd just like to understand if we should still see more adjustments there or if RC2, for example, was the last closing in the cycle. This was a plant that you purchased four years ago, if I'm not mistaken. Would it be feasible to turn it back on if the demand improves? That's what I'd like to understand. Thank you.
I think Adaljio can talk about the seasonal pattern and this front. I'd just like to highlight that you're absolutely correct.
Nothing that we've been doing in wood sales, we're not selling anything compromising our front. We're very conservative about that. Especially, you know, in a place where if you sell too much wood now, if you do it too quickly, then that affects how your forests are managed. They're very regular. They have to be cut in six years. You can't do it beforehand, otherwise you have losses. There's no compromise at all, so we're not burning future cash. I'll pass it over to Adaljio.
About RC, it's also important to highlight, as we announced, that we had a temporary downtime for the RC2 activities. They were not closed. We announced that the Queimados plant was going to be closed, and that is an actual definitive site closing. The equipment will be moved and so on.
When it comes to S2, when we purchased Ceusa and Cecrisa, we had an execution plan. We knew they were going to be important assets, that they were strong brands, but that many industrial assets were outdated. After the purchase of Ceusa, we started a new line in the plant called RC4, and we had foreseen that the RC1 plant would be closed. Excuse me, RC3, that is. RC3 are these two plants that used to be called Ceusa in Urussanga. With Ceusa, we actually started a new line, and later, about a year ago, it was closed. We closed the RC3 plant, which was much smaller. With RC2, It's not any different. We're implementing some changes that improve the RC1 lines. We also have, in the first quarter of 2024, the Botucatu plant coming in.
Considering our current demand, it makes sense to suspend our activities. In the future, I mean, these lines are okay, they're not new, but they're good. They can operate perfectly well. If the market or as the market recovers, and we expect it to do so, it can be turned back on. Right now, we're in the normal cycle. First, we're going to start the Botucatu plant, which has more competitive costs, which has a better scale, a lot of technology, many processes and possibilities, different shapes. It's a very versatile plant. If the market remains challenging, even if you use resources from the Botucatu plant, if you work with RC1 and RC4, these are some plants in Criciúma, in Eunápolis, in the south. We don't expect to see new closures.
We believe that this combined capacity is enough, but we're always paying attention because there are many lines. If we count all of the installed lines, all the ones that are stopped and so on, we have about 16 lines. It's very common to stop one and adjust it, and this kind of process is very common in investment activities. It's different from wood, where you have a line for each factory, so that works differently. Adaljio, tell us a little bit about what you expect.
Rafael, thank you for that question. It's hard to foresee a trend in such an unstable scenario. We don't usually perform our own volume expectations or guidances, what I, what I can tell you about the market, considering the structural factors in the economy, for example, yesterday, the Central Bank reduced its interest rates.
Everything is moving in a macroeconomic direction that will give us a better quarter or the better half, the second half of the year than the first half of the year. Usually, as you said it yourself, it is. We're very positive about the third and fourth quarter, especially the third. We know that the effects of this kind of change in interest rates are usually low, slower, but it brings an important variable to the market, which is a bit more confidence. When we talk to the clients, we've visited many clients personally around Brazil. We can clearly see that there is a positivity. Of course, no one is satisfied about these results. There are great opportunities for improvement, but we're not disillusioned. We don't have a negative perspective, we're working to have a better second half of the year.
Of course, it will depend on the market. Just an additional comment, we have performed differently in the furniture industry. That represents about 50% of our sales in comparison to wood. Maybe that speed will change a bit between the two of them, but at the end, it will be a positive scenario. At least this is what we've been projecting.
The next question will be asked by Thiago Longo from Bradesco. Go ahead, Thiago. Your microphone can now be turned on.
Hi, everyone. Can you hear me? Good morning. I have a couple of questions on my side. First, referring back to forest sales, what's your margin of those sales? Is there a scenario in which the wood panel demand would recover and would allow us to go back to it? You would prioritize wood sales.
I'd just like to understand how you calculate that. I know that you're always going to seek the best ROI for your forestry assets. That's what I'd like to understand. Also, just a note from our side. I don't know if you can give us a little bit more information about this, because. It's very difficult to have projections in the wood industry. I understand that it always has been, but right now, its size has changed, so it would be interesting to get a bit more information. My second question is still about wood panels. If you can tell us a little bit from the offer side, what have you been seeing for the next months for the market in Brazil? That would be interesting to hear. If you'll allow me one more question about Deca.
It wasn't as clear to me, and I apologize. The price adjustment that you've been performing to readapt the company commercially and regain market share, has it been concluded? Will it now be a bit better suited? Meaning, is Deca going to operate with a leaner budget, so or is Deca still going to have to make advances on the commercial side? Thank you.
Well, three questions. Just referring back to wood, Thiago, I'd like to insist on this. We're not, by nature, designed to sell wood. We sell wood panels, and our entire forest has been adapted to that operation. If the market recovers, you mentioned margins, we are looking at some metrics which are, of course, confidential due to commercial reasons. We prefer to keep it like that.
I'd just like to say that in a market, if the wood panels market recovers, well, we had some price reductions, but they were one-offs. For example, with resales, where as, for more basic panels, prices have gone down, but for everything else, we've been keeping reasonable price margins. If the market has a greater demand, then we will produce more panels, and we're going to reduce forestry sales. There are also some areas where we sell forests, for example, in the Northeast, where we don't have plants. Selling forests is business as usual for them, in that case, their operation in the Northeast. Here, as we have a greater demand for panels, we will produce panels. Our calculation, Thiago, is, follow this strategy. It's not just about getting the lowest or the best margin.
We have other conditions. For example, under no circumstance do we ever let go of a market that we believe is important for our market share. You might not advance a lot because sometimes advancing market share comes at a cost. We haven't been doing it, but we've been solid, maintaining our market share, even gaining some market share and simply following these lower demands. That's how I would separate this operation. What we have in the Northeast, Adaljio might give us some more color on that. We have regular wood sales in the Northeast, which have given results in Caetex, and we report our participation here, consolidated, and so on. Here in the South, where we've been making some significant wood sales, these are simply related to what we haven't consumed internally for the wood panel division.
If we refer back to these price levels, it's better to sell panels than to sell forests, even if forests are expensive. Adaljio, Raul, you might want to add some information here.
Speaking about the wood division, it's exactly as you said, Antonio. Our focus has definitely been on generating wood to produce panels. Our operation in Maceió is still very small, but it's becoming relevant. We still haven't gotten a good forest result because of how connected it is to our production. The relevance of our results this quarter, in comparison to the previous quarter, had better volumes, but the most significant thing is increased prices in wood. As Antonio said, it's about 3 or more times than what we had in the first quarter of last year.
This is the biggest impact that we had in result generation. It's hard to have an estimation for the future if we're going to have what kind of volume, because we're going to continue doing it that is producing wood panels. We expect to go back to that margin, that level of margin is above 25%. Whenever we can, try to improve it even more. During some the weaker moments will be a little bit below that threshold. We have a tool to manage this more complicated stage by using this moment in which the wood panels market is not doing very well. We've been doing it for some time. This was started in Raul's administration.
We want to clearly monitor our operation to understand what is our optimal capacity to avoid advancing, as Antonio said, not doing anything crazy, and avoid any kind of speculation, because we know that that comes at a cost. In Brazil, it's as expensive as not having wood. It's critical, especially because, as a reminder, we're not competing with wood panel product producers or makers.
Well, Thiago, to talk about Deca, we had one competitive adjustment in February to have a good price match with what the competition had been doing. We even got some, we had some price gains with the brands we had and with our historical work.
Some adjustments will be necessary for new products, for other lines, but our heroes in ceramic tiles and our best items will have a better mix, much more than price adjustments up or down. Another point to highlight is that in a long chain like this with inventories, you have to wait some time for it to react, but we started seeing from May some good changes. What was at the end was repriced. Our clients were able to sell, and they started doing better. This led to some advantages and some market share gains, as Caio said, and this should continue from now on. As the market reacts in the third and fourth quarter to the seasonal changes, then we'll benefit from that again. We're paying attention to the market, but without major changes.
Our market also seeks stability, so changing prices too much can be confusing for them.
Thank you, Raul. Haddad, if you can tell us a little bit more about the wood panel division.
Yes, Antonio has emphasized this whenever he could. We have a feeling currently that the market or the prices have settled. We can't forget that it's not only Dexco, but our competition has also operated far below what they would like to do. Considering all of the investments that we see today in hope and what is in the pipeline, as a reminder, Suzano is building its new plant. Its Klabin is also extending its capacity in Paraná. We have Paracel in Paraguay, that also buys wood from Mato Grosso do Sul. It's a cycle, and it requires a lot of time to balance itself out.
You can't do it too quickly because we need seven years for a forest to be fully developed, so it takes time. Nothing changed structurally that makes us see wood as a type of raw material that is easily available in the market. Quite contrary, we're paying a lot of attention to that still. Thank you. My question was actually about wood panels. Oh, wood panels. Considering the supply, our competitors have made their investments, some in ramping up and others connected to ramping up, but we don't see anything new. Quite contrary, we don't believe there will be any additional supply. Considering that the market, considering the market, we believe that we will need to make some adjustments, but there's nothing critical happening here. We do see some cases of, well, challenges that a few players have had.
In Rio Grande do Sul, there are players that are facing financial hardships, which may even make them close their capacity. It's not very significant, in such a difficult market, we have to pay attention to these things. Thiago, I think it's important to highlight that this is a very important increase in wood prices in the market. When you look at our balance, you see one side of the coin. It favors people who are selling. Imagine if you're buying, as practically all of our competitors are. What's happening right now is that the supply of wood panels is in a substantially different model than what we saw in the past. There are many people running panel plants full steam and just wait for the market to go. This is new in the market.
We currently have an operation, given wood prices and market conditions, there are operations, with major players in the market who are not going at full capacity. There are many people having contingencies on their production, regulating their shifts, going slower, being more responsible, because really, going full steam will consume much more expensive wood, and the market might have lower prices. We haven't been seeing it. Overall, when we look at our competition, everyone seems to be working well to maintain a balance with what's reasonable. No one can lose in terms of price, that would be the worst scenario possible, especially for clients buying wood. We see many contained operations. I think that we'll see much more contingencies or line closures than any increased supply. Perfect.
Thank you, everyone.
The next question was sent by Mr. Marcelo Farid from Goldman Sachs. He asks: "Good morning, everyone. Thank you for your time. Two questions. How relevant are wood sales in your wood panels, EBITDA, and how sustainable should it be? How are your exports margins doing? And in Deca and Ceramics, when should we expect an operational improvement? What are the latest market indicators? Thank you."
I think we've talked a lot about forests. I think this might have answered your question. I don't know when this question was received, but I hope it has been answered, and if not, please let us know. Maybe Henrique can talk about that.
Yes, I think we've talked a lot about forests focusing on wood production. Considering exports, we see that margins are a little bit more pressured right now.
We're working with reasonable margins, considering our history, a little bit below what we had during the brunt of the pandemic. In late 2021, it affected our spread, in any case, what we've been seeing is that export markets are deteriorating. We still maintain exports as irrelevant, a priority market for Dexco. Obviously, we operate to maintain a long-term relationship. We normally don't have spot negotiations for no reason, because it carries significant added value, we are looking at the horizon. Most of our exports are for North America, Latin America, Colombia. We have some challenges there due to the economic context, exports are still a part of our focus. Unfortunately, this year is a little bit more difficult, it's still contributing to our operations at the capacity that we have been operating.
From the Deca Tiles perspective, we've been having very good operational gains, a clear improvement. We've brought in a new operations director, who joined us about a month ago, and he's going to accelerate these initiatives. With the structuring initiatives that we had, we gained resilience, occupation, reduced our fixed cost, and we're now able to compete at much better levels. I can also say confidently that we are finishing the year in a much better operational capacity, and we're well prepared, looking at the investment cycle, to make the most advantage we can from this operation, with lower investments and lower CapEx than what we had in the past. We're very prepared to compete in the medium and long term. As Francisco said, we've been seeing some signs of improvement.
They're still consistent across some categories, a little bit more erratic in others. We're seeing a more stable drop at 1 digit, and this is in line with the 2-digit reductions that we saw earlier this year. June and July will definitely be a 1-digit drop in ceramic tiles. As a reminder, it was weaker last year. The comparison changes. We're definitely going to see better numbers than last year. In metals and in ceramics, we see that sales are improving, still below what we saw last year. We see some trend towards an improvement. We'll have to see how things are going from now on. We're very positive about this. This will be helped by the seasonal pattern.
Thank you. That concludes the questions and answer session. We'll now pass it over to Mr. Antonio for his, for their closing remarks. Go ahead, sir.
Thank you, everyone. Francisco, Guilherme, and the entire team is available, as are we. If you have any questions, please let us know. Thank you for being here, and let's continue with the second half of the year. Thank you. This concludes Dexco's conference call. Thank you for being here, and have a good day.