Of Grendene S.A. I want to remind you those who require simultaneous translation that we have this tool available on the platform. To access, simply click on the interpretation button through the globe icon at the bottom of the screen and choose the language you prefer, Portuguese or English. Anyone listening to the video conference in English, you can change the original audio. You can just choose to mute the original audio. We will tell you that this video conference is being recorded and it will be made available on the company's website, ri.grendene.com.br, where you can also find all the press release materials and the complete materials. You can do the download of the presentation from the chat icon. During the company's presentation, all participants will have their microphones turned off. After that, we are going to start the question and answer session.
To ask a question, go to the bottom of your screen and click the Q&A icon, then input your question. When your name is announced, a prompt to activate your microphone will appear on the screen, and then you must activate your microphone to ask questions. We recommend you that you ask all the questions at once. We emphasize that the information in this presentation, as well as any statements made during the video conference concerning the business prospects, projections, and operating and financial targets of Grendene S.A., are based on the company's management's beliefs and assumptions, as well as information currently available. Future considerations are not guarantees of performance. They involve risks, uncertainties, assumptions because they refer to future events, and therefore, they depend on circumstances that may or may not occur.
Investors should be aware that general economic conditions, market conditions, and other operating factors may affect the future performance of Grendene S.A. The result is substantially different than those stated in such forward-looking statements. Today, we have the following of the company executives with us. Rudimar Dall'Onder, Chief Executive Officer, Gelson Luis Rostirolla, the Chief Operating Officer, and Alceu Albuquerque, the CFO and Investor Relations Officer. We also have all the company's key managers present. I will now give the floor to Mr. Alceu Albuquerque.
Please, Mr. Alceu, you can go ahead. Good morning, everybody. Thanks for your presence in our video conference for the release of the results of the fourth quarter 2022 and the year 2022 also. It's a pleasure being here with all of you.
Today, I'm gonna start talking about a little bit our performance of our e-commerce that had an excellent performance and a continuous growth presented since August 2020, when we started the project of migrating the online stores from our external market for Grendene's own management. We had a growth in all the indicators. Volume of sessions grew 49% in the quarter, reaching 21.2 million sessions. The number of single users grew 20.58%. GMV, BRL 23.9 million, a growth of 46% when compared to the fourth quarter of 2021. Regarding the penetration of the channel on the internal market sales, it grew 2.1 percentage points, leaving 4 percentage points on the fourth quarter to 3.4% on the fourth quarter of 2022.
When we look at the penetration of Melissa that has products with more value added, the products with a freight that a cost of delivery that doesn't impact the total cost of the product because the freight costs are free because of the total value of the company is a little bit higher. Penetration of Melissa on the sales of the internal market, it's 9.6%. All the results we can observe here on the fourth quarter and in the year, as I'm going to show you on the next slide, is a result of our investments on this channel. For example, the investments in performance marketing, we more than double up the percentage related to the norm on the fourth quarter of 2021. We invested in the year of 2021, sorry.
We invested 5.9% of our net revenue generated of the GMV on the online channel and performance marketing. In 2022, this percentage was just 11%. We are investing more in performance marketing, and we are investing in our team, which is composed for over 120 people nowadays. This channel, we believe it has a high potential of growth. When it's mature, it's going to reach 10%-12% of penetration. When we look at the numbers of the year, we sold our products in all our stores for almost 500,000 clients, a growth of 90%. We sold 800,000 pairs. That was up 85%. GMV was about BRL 70 million in the year, a growth of 80%. We also increasing 15%. We served 844 cities.
We had cities covered. When we look at the penetration, it went 1.1% penetration. Now it's 2.9% general penetration, and Melissa's penetration from 8.4% to 9.2%. We can confirm what I mentioned before, that our investments in performance marketing and in experience of the consumer experience in teams and training is demonstrating results. As I mentioned before, this percentage that in the year was 2.9%, we believe that in the average and long term, it's going to be 10%, 12%. It's a very important channel to us because we can get closer to the consumer through it. We can learn and capture trends easily through this channel.
This channel will give us information about the consumers, besides being a channel that will give us more margins because the company is selling directly to the consumer. We eliminated the markup of the distributor of the retailer. In our next slide, we are gonna talk a little bit about the landmark of Melissa that we overcame on the quarter, the number of 407 clubs. In December 2021, we were 390, so now we have 17 clubs, extra clubs. This is the channel that represents Grendene the most abroad. It represents 60% sales at Melissa for the domestic market. Melissa has a huge penetration. It reached 9.2% on the fourth quarter.
The stores, they are extremely important to us for the online channel because of the omnichannel. Clients can buy online and can also go to the stores to pick the products. This landmark of 407 clubs reached, we also started the project of internalization of the franchise network of Melissa. As we told before, from June 2022 onwards, we announced that we wouldn't renew the contract with the franchisor. From January onwards, we assume this management, this administration. We have people working very focused on the improvement of the services for our franchisees, having feedback from all the franchisees since June and up to now. The structure is ready to escalate.
This internalization of the franchise network is really important for us to get closer to the franchisee and the final consumer, as well as in the online channel to better capture these trends. We have financial gains in this operation. We believe that in two or three years, this operation is going to add about three or four point percentage points at EBITDA of Melissa because the cost of the internal structure that we had, it's inferior to the commission percentage we used to pay for the master franchisor. Apart from having qualitative gains, we also had quantitative gains with this project. Talking a little bit about GGB, in 2022, we had a, like, a construction year for the company. I don't get tired mentioning that this company came out of nowhere.
It received strong brands, it didn't have any structure. It didn't have people, team or a physical space. During 2022, we hired people, a highly qualified team. We established processes, governance of the company, and now we've got teams in the United States, China and in Brazil, all of them integrated with a structure and very clear targets defined for 2023. We kind of expanded throughout 2022 the distribution of our products. These products nowadays, they can be finding retailers that were not present before. For example, you can find nowadays Ipanema selling at Macy's, a huge retailer in United States. We had many advances on 2022. We transferred Grendene Shanghai to GGB in the end of the fourth quarter, and we also transferred all the distribution from United States to GGB.
We have a new logistics operator that is showing a higher level of efficiency regarding logistics in orders of wholesale. We had many advances. Another result that is possible to measure now is the performance of the online channel because it's more direct, it's more immediate. The GGB team builds actions, improvement actions, we can see the growth happening on this channel. On the fourth quarter, the revenue increase was 658%. When we look at this performance throughout the year, it was 282%. It's important to notice that it's not isolated. It's a growing growth. The first quarter we had 146% on the second. The third, 274%. On the fourth quarter, we had 658% growth.
It's very important to show that it wasn't just regarding volume and revenue, but also other indicators that are important for the online channel. The website traffic, it grew 66% when compared to the three quarter of 2021. Conversion rates, 1.28 per percentage point when compared to the fourth quarter, 2021. The volume grew, increased 700%, and the number of orders also. Not only revenue increased, but also all the indicators that demonstrate a constant growth on the channel. We can see great opportunities ahead in 2023. We have a structured team, and now our focus is to strengthen all our brands and to sell. What are the opportunities?
The new Melissa retail, the GGB team together with the Melissa team, we are developing a new layout for the Melissa stores that's going to be implemented in Brazil and United States. It's a layout, in-store layout where we wanna achieve a global recognition for the brand through it. We are also supposed to launch Melissa's e-commerce in April. It's gonna be our second online e-commerce. We just have one now in United States. We have opportunities to growth with Ipanema at Amazon and opportunities to open new retail accounts with Ipanema. Together with Ipanema, we have the Cartago and Zaxy flows. We are also going to open four kiosks of Ipanema in Florida with places with high flow of people that are going to help to strengthen the brand identity in the region.
We are also going to intensify marketing actions in United States of Melissa and China. In United States with digital influencers, and in China, we've got an influencer with a high level of re-recognition and followers on platforms. This is one of the strategies we are going to use to strengthen our brands internationally. What are the challenges that we face on 2022 and we are going to probably face on 2023? The global economy kind of decreasing a little bit. China and United States are part of this scenario. We can see high volume of inventory. The retailers are delaying and postponing orders, and many times giving this risk of high inventory, giving that to the manufacturer. Sometimes they make the sales, but who delivers it, who ships it is the manufacturer.
The inflation scenario is quite challenging. It's a global problem. Retailers with high levels of inventory trying to reduce the number of manufacturers supplying and transferring risks of high inventory. It's a very challenging scenario, yet we can see a strong growth happening in the year. COVID and the Chinese New Year's kind of hindered the performance. COVID in 2022 and COVID in 2023, it's in China. Maybe we will start to work a little bit more actively if in China from now on. We have a very strong influencer hired to work for us from China, and you will see the new marketing actions happening. Before talking about the numbers of the fourth quarter, I would like to give you an overview of the quarter. The fourth quarter was a little bit more challenging than we expected.
Even though many of the elements were in place, we knew them before, such as high inflation, high interest rates, unemployment rates, that it's changing, but it is still high. A high level of that's kind of compromised the revenue available of the consumers to buy non-essential items. Temperatures below average in the South and Southeast, and the rainy season above average in the South and Southeast ended up compromising a little bit the sales for the end consumer. In the end, an element that we had it mapped before, but it's still lasting, is regarding political uncertainties and economic uncertainties. Before the elections, regardless of the candidate who would win it, we would have, life would go on.
What we have been observing up to now is that our clients, distributors and retailers, they kind of have a very high level of not trusting. They don't have certainties about politics. They are waiting to see what's gonna happen from now on. What does that influences to us? It reflects on our sell-out and selling.
What c ould we observe in our brands. Melissa, for example, there was a sellout of 12.6% inferior decrease compared to last year. Even though the sellout had increased 8.7%, the selling of the brands of division one went down 12.6%. If you observe Melissa Clubs selling -12.6%. Sellout is a little bit less than the sellings. The selling went down -17%. Selling receded 12.7%. I'm trying to show that our distributors and retailers, they have levels of inventory that are lower than last year, which has been hindering our performance on the fourth quarter. They are working with 30 days less left for inventory. It's a month with less sales. Check the performance during the year.
The performance win is better than the selling. Melissa Clubs grew 5.6%. Selling decreased 5.7%, 3.9%, sorry. Selling decreased 5.7%. Here I can demonstrate that our distributors, retailers are working with less inventory. We still don't know if this trend of working with smaller inventory is something that is going to continue due to better cost opportunity that used to be 2% and now it's 13.75%. Or if it is a result of a better learning, where they have learnt to manage their inventories best, or if it is a result of being afraid of losing sales due to not having inventory, and they prefer that than to have obsolete inventory in case they don't sell.
Maybe this could be just a temporary behavior that as soon as the political and economical uncertainties disappear, we do believe they will disappear, they will start to fill in their inventory again. We understand that this second option is the one, the most probable one. We believe that throughout the year, all the retailers and the distributors will fulfill their inventory. Let's make an analogy. If 2022 was a year of 11 months of sale in Grendene. Why 11? Because they reduced in about 30 days their level of inventory.
If this is so, 2023, since we believe that our clients will recover their level of inventory as soon as these uncertainties disappear, maybe 2023 could be of 12.5 months of sale or maybe 13. Maybe we believe that throughout the year, we will observe restitution in the inventory. Let's get into the results of the year. What was the result of the fourth quarter? The volume was down 14.9% with 43.6 million pairs. In the domestic market it was 30%, and in the foreign market it was 7%. The gross revenue was stable, down 0.9% with a total of BRL 938 million.
In the domestic market, the revenue was up 2.5%. This is a reflection of a greater gross revenue per pair in the fourth quarter of 17.9%. Result of two factors. First, a price adjustment. We did this in February 2022. Second, selling products with a greater added value. For instance, we opened a store at Copan. This retail store, the average price of the product is 200 BRL. The energy is a line that is growing. Just an example of one of the lines that we are creating and focusing on that have a greater added value product. Ipanema itself had an increase in revenue, although a reduction in volume.
They increased their revenue up to 5% because besides selling the flip-flop, the sandal and the slide gained representativity in the sales from Ipanema. Instead of selling a flip-flop for BRL 90, you are selling a sandal with BRL 29 or another one for BRL 39. You add revenue for each pair. The products of EVA had an excellent result. EVA is a product with a greater added value. It is lighter, it's more comfortable, and that's a trend we have observed. This focus on greater added value products has contributed together with the price readjustment to compensate the increase in the raw materials price. That helped in the domestic market.
In the foreign market, there was a down of 10.3% because we also had an increase of the gross revenue per pair in BRL of 4.3%, and in USD of 20.6%. The recurring EBIT went down 25%. It reached BRL 132 million as a result mainly of the impact of some operating expenses, such as investments we are doing right now, as I mentioned in the third quarter, that will have results in the future. We had an impact of workforce in our CPD.
The recurring EBIT went from 22.3% - 17%. The recurring net profit achieved BRL 209 with 29.6% in 2021, compared to the fourth quarter of 2022 of 27.4%. Here, I'm not going to mention each one of the details. I can show you a gross revenue that down 0.9%. The net sale revenue from 43% - 45.9%. Operational expenses grow from 21% of net sales to 29.4%. They are very concentrated in the last three lines. Other operational profit, revenues expenses, and this equity accounting is more than GGB. As I mentioned, the recurring EBIT reached, excuse me, BRL 132 million. That's a decrease in 25%.
The financial revenue is stable. It reached BRL 56.9 million. The net profit reached BRL 202.6 million. Here I'm showing the variation of the gross revenue. The volume reduced BRL 146 from the gross revenue. The price and mix added BRL 148. The exchange was more value than it removed BRL 14.2 million from the gross revenue. When we go into the COGS, it was down 1.4% compared to the fourth quarter in 2021. All the components, except labor, showed a growth. Sorry, a decrease that was greater than the net sales revenue. Raw material is one of the main components of COGS that was putting pressure in the COGS into last year.
The third quarter seems to be the point of change. From now on, we should perceive the decrease of raw material in the market. The COGS of raw material was down 3.3% and COGS in labor went up 13% to the operational expenses. I'm going to show you this later. The smaller volume of sales impacted the contribution of COGS on the net revenue, which I show on the right. About net sales revenue, raw material was down 1.4%. I'm going to show you in the next slide. This is the first quarter from the beginning of the pandemic that the COGS on raw material represents less in the net sales than it represented in the previous year.
Let's see the fourth quarter in 2022 represented 27.1, which is 1 percentage point down compared to the fourth quarter of 2021. The third quarter in 2021, it represented 30.8%. In the third quarter 2021, that was 21.4%. Second quarter, 31.9% this year compared to 27.3%. The fourth quarter between the third and the fourth quarter, we had this changing point where the raw material has decreased throughout 2022. Considering the exchange and the price to have inventory price, we have kind of a loss here. This timing happened in the third quarter. Here we can also see, we still have space to see the reduction in representativeness of raw material in the net sales.
Our inventory average cost of the PVC compound is about 11% greater than the reposition cost. The reposition cost, so we can rebuild our inventory, is smaller than what I have in the accounting as an average cost. As we buy more raw material, my stock average cost will be reduced and that will impact on costs. The representativity of the raw material has receded here. The OMS has reduced to 0.6 percentage points. The labor was the only one where we have seen an increase, and that is due to the operational impact. A smaller volume of products that you can reduce your labor costs. Even if we are dynamic, if we are efficient for adjusting the labor to the product, to the production value, it is not an immediate impact.
Even in the fourth quarter, we have created actions to adjust our factories. We have reduced workers, temporary and permanent, positions. Temporary, usually throughout the third quarter, we hire temporary workers because we have a greater volume in the factories. We will not hire them again. It's not necessary, and that increases our efficiency. Here, I show you a little bit about the raw material movement throughout the year. You can see that our main factors of raw material have decreased throughout the year. The PVC compound, which is the main one, has receded 26.6%. The PVC resin, that is a compound for the PVC compound, it has decreased 43.2%. About operational expenses. When we see the commercial expenses, they grew 0.8% in this period.
Most of the commercial expenses have decreased in this period, except advertising. That was up BRL 6 million. That's 20% up. That's because we are investing in advertising again. Before the pandemic, we invested 6% of our net revenue. During the pandemic, that went into 3.3%. Now in the fourth quarter, we invested 4.8% of the net revenue in advertising when compared to 3.8% in the fourth quarter of 2021. The main impact here in commercial expenses was advertising. We had an increase of BRL 1 million of freight expenses. In the administrative expenses, it is more in terms of labor. Other operating income, we have a series of small expenses. I'm going to mention some of them.
The main one is the elimination of the investments in the transference of Grendene Shanghai, GGB. We also have management of franchises that are included here. The management of franchises, the structure I mentioned about the franchise network of Melissa. Here, I show you the variation of the EBIT, what were the main points that impacted the company's EBIT. Here it is specifically CPV of labor, as I mentioned. Here advertising that went up BRL 6.1 million throughout the quarter. We have in our demonstration information all these figures. Getting into the results of this year, we reached 148 million of pairs sent. That's a decrease. In the domestic market, it reduced 5.6%. In the foreign market, it up 2.9%. That was concentrated more in the first quarter.
The gross revenue went up both in domestic and foreign market. In domestic, 10.1%. In foreign, 7.9%. With that, the total gross revenue went up 9.6%. That is BRL 3.11 million. The recurring EBIT went down 31.5% in the year and reached BRL 284 million. The recurring net profit was 17% and went to 11%. The net profit went up 13.2% as the recurring EBIT went down 21.5%. The recurring net profit went up 13.2% due to the financial results we had throughout the year. With that, we had BRL 613 million and net profit from 23.1% - 24.4%. Here again, we have the gross revenue growing at first 6%. Domestic market, 10.1%.
Foreign market, 7.9%. 42. The COGS grew from 56% - 59%. Operating expenses went up 20.8%, going from 27.2 of net sales to 30.6%. With that, our operating result was BRL 224 million, which is a decrease of 31% when compared to the values of 2021. The recurring net profit reached BRL 613 million. Here I'm showing the same graph that I showed for the fourth quarter, I show for the year. A variation of 29% of the net, the gross revenue came from price and mix. A volume removed BRL 101 million from them.
Due to a stronger dollar exchange, removed BRL 33 million from the gross exchange. Here I'm showing the same graphic for this, the COGS. We see on the right that throughout the first three quarters we didn't see an impact of the reduction on raw material. On the fourth quarter, as I showed you before, we can see this. Throughout the year, raw material still represented more than it represented in 2021, 2 percentage points more. OMS is quite stable and labor was up 1.9 percentage points. Here, operational expenses. We have several of investments that I mentioned throughout the year that are being carried out in the commercial activities. We have all the e-commerce activities, 124 people. We have a Bergamotta team that is 25 people team.
We have the reinvestment and increasing investment on advertising. Many different initiatives that still do not generate results. They still have not reached their mature level, but the structures are ready and fit to offer this growth. Whatever that comes as a revenue will not be proportional to the increase in expenses. Even in sales expenses, the two main lines that increased was freight. There is and advertising that was up 34%. In general and administrative expenses, the main increase here is in labor. Other income and expenses is similar to what I showed you in the fourth quarter. We have the COGS, we have an impact of the operation transference to Grendene, [guess], to GGB. We had the reduction in inventory. These are the main impacts. Most of this group is a non-recurring item.
Here again, I show you one of the main variations of EBIT. If we look at the three components of COGS, these are the main variations. Besides the net revenue that removed BRL 18 million from EBIT, COGS was BRL 17 million, labor BRL 16 million, OGF BRL 15 million, and advertising BRL 14.2 million. We have other commercial expenses that are the sum of different small expenses. Talking a little bit about our investment committee portfolio. It has been reducing, and the trend is to reduce even more throughout time. Our portfolio started with BRL 581 million. From this, 6% was in private credit, debentures, 13% in variable income. The only action we have, a share we have from the beginning was the Vale do Rio Doce. It's the only share we kept.
I put the historical profitability since from 2019, 2020. This portfolio kind of generated 392% of CDI. The Securities and Exchange Commission, 270 CDI. Private credit, 50% profit, equivalent to 217% CDI. Variable income
1,133.9 CDI. As I mentioned before, this portfolio tends to reduce in the medium term. Even because we are going to tell you now about the dividends, extraordinary distribution, BRL 1 billion of net BRL, with reduction of fiscal state taxes. When we realized in 2019 last year, We had a lawsuit that recognizes that Gerdau doesn't have to include the values coming from financial benefits on the basis of calculation of the facts. What's the practical effect on that is profits, past and future profits related to the fiscal benefits given by the state of Ceará, they will start being distributed to the shareholders without any restrictions or risks of being deducted by the taxes and social contribution.
What's the incentive that we used to have in our accounting on the 31st of December? We used to have BRL 1.819 billion. How is that divided from this BRL 1.8 billion? BRL 1.584 billion are reserves from ICMS, from tax on the movement of goods and services, and the other, the benefits from exports. According to the initial we started elaborated by [guess], our partners, the decision, it doesn't make it clear if the decision, it will involve PRVM and PROAPI. During the beginning and the decisions that we're taking, in certain moments, we talk about in fiscal benefits given by the state of Ceará in a very wide way. Sometimes we talk about specifically of PROVIM.
The recommendation of our advisor, legal advisor is that this BRL 235 million , it can be distributed, but it has to be discussed. The recommendation is that the company files a new legal recommendation for this benefit, specifically that can be recognized. What do we have as net profit that's certain we can share? BRL 1.584 billion. From this amount of money, the committee approved, we distributed BRL 2 million in 2021. These amounts are not doesn't suffer any reductions of taxes. Now we approve the distribution of BRL 1.004 billion gross from this reserve fund. Why BRL 1.004 billion? Because we have to deduct legal reserves from this amount, 5%.
As the company had already reached the limit of 20% of the share capital for the limit of the balance of the legal reserve, from now on, Grendene doesn't need to deduct this amount to future distributions. Why? Because we have reached our legal limit of 20% in integralized capital. The gross amount should be BRL 1.054 billion. As the limit to reach this amount was regarding BRL 4 billion, gross amount is BRL 1.004 billion. BRL 1 billion is the net amount. The balance from the incentive reserves, legal reserves is. The balance left is BRL 577 million that in the future, the general meeting will deliberate on what to do with this amount of money.
The results of 2022 is BRL 568 million. From that, 234.4 is incentive reserves, it makes up BRL 233 million, reducing the amount until we get to the limit of 20% of the integral in share capital. We have to discount BRL 16.6 million from the calculation basis, which left us a net amount of BRL 316 million to use. This result from 2021, the committee suggested AGV extraordinary distribution of this amount. BRL 1.004 billion, discounting legal reserves of BRL 4.5 million.
The total of dividends proposed from 2022 is BRL 1.316 billion. We have already paid BRL 202 million throughout the year, quarterly, as the company always does, we have a balance left to distribute of BRL 1.114 billion that will be distributed according. Well, the shareholder that have Grendene shares, GRND3, this person will receive, as I'm gonna say, BRL 1.4 million. That corresponds to BRL 1.14 per share by dividend, and BRL 110 million for JCP, for interest on equity, IOE. When we deduct taxes on source, this amount becomes BRL 103 million, equivalent to BRL 0.10 per share. They will receive this BRL 1.21 per share.
The shareholders that have shares from May 12, 2022, the payment will be on May 17, 2023. This right. With that, I'm only going to show you the amount of dividends we paid since the opening of our capital. Since we went public, since 2004, it's BRL 5.6 billion. What I had to say in a very summarized way was that. Now I'm going to open for questions. Thank you so much. Now we are going to start the session of Q&A, questions and answers. I'll remind you to ask your questions. You have to click on the Q&A button at the bottom of your screen to write your question. As your name is announced, you will see a prompt to unmute your microphone will appear.
You'll have to click on that to activate your microphone to ask questions. We ask you kindly to ask your questions all at once. Let's go to our first question. It's from Wagner Salaverry, an analyst from Quantitas. Wagner, we are going to open your audio so you can ask your question.
Good morning, Alceu. Firstly, congratulations for the CFO position. It's well-deserved. My question is... The dividends that you are proposing to pay, that's gonna be paid in May, it's gonna be relevant from the structure of the company. The company used to have a very relevant reserve account, and that's gonna have a bit of an impact on your daily basis of the employees. Well, how do you intend to work with this structure with share capital or in smaller volumes of net cash? If in a way we are going to have a difference regarding deadlines for clients, suppliers, if that's going to change those factors?
Thank you for your question. I'm very happy, very with this promotion and very happy for being recognized and the trust that was deposited on me, especially from Dall'Onder and Alexandre, my colleagues, the other directors. Regarding the day-to-day of the company, it's not going to distributing anything, this influence, this distribution of BRL 1 billion. It's not going to influence the structure of capital of the company. We are going to continue paying our clients, our suppliers. We are going to give time to our suppliers to pay. We had BRL 1 billion cash, and in practice, that's not going to influence on anything in our management of cash flow.
Regarding GGB, I would like to understand from you. You have shown your scenario. It's a little bit difficult abroad. We can see that. Within what you have planned for this year from your basic scenario in the end of the year, are we still going to have GGB on the fourth quarter of GG B2023 with a bit of a cash flow usage, or are you going to have the break-even? Our approved budget considers an expand of money in 2023. We are going to have Interest on Equity, and from 2024, the operation will reach the break-even point, and it will start generating cash flow. Let's go to our next question. Jair Matoso, investor. We are gonna open your microphone, so you can ask your question. Jair, you can proceed. Jair, can you please ask your question? Good morning.
The idea is to distribute future dividends with fiscal incentives in 100%. This question, I don't have how to answer you because it's a decision that the board is going to make. As you've seen yesterday, we approved a new dividend policy that brought two alterations, two changes that from now on, the minimum mandatory dividend is 25%. Besides it, the dividends policy started to include the fiscal benefits from the state in the dividend calculation basis. They will start to be part of the calculation basis. But how much of the amount is going to be defined by the board of directors quarterly. We would like to remember you that to ask questions, you have to press the Q&A button and then write your question, type in your questions.
When you see the prompt to unmute your microphone, just open it and you can talk. We ask you that your questions be done all at once. Thank you. Our next question comes again from Wagner Salaverry.
Wagner, gonna open your audio, open your microphone, so you can ask your question. Also, please, if you can tell us a little bit about your perception on the beginning of this year regarding the effect of Melissa suffering on the fourth quarter and the high inventory levels that you mentioned before. How is that going since these two months of this year? Is there anything different happening right now? Is it different or is it normal? The Division one, it's still operating the same. I can say, Wagner, about it. Division one, we have observing a growth.
The sellout is better than Melissa and selling also. We can observe the selling growth from division one in this two months of this year. Melissa has a little bit more challenging sellout, is a decrease in sellout and selling. Reductions in personnel, what's gonna be the impact? Is it gonna be neutral in the first quarter and the manufacturing adaptation to that? When is it gonna happen during the first quarter? The reduction costs, are they going to be neutralized with this decrease, or is it gonna cause higher impact? This adjustment, we did that throughout the fourth quarter. Throughout the first quarter is when we are going to be able to see the positive scenario resulting from that. We are not going to have any layoffs in this first quarter.
Maybe, but the most of the layoffs happen on the fourth quarter. Thank you. Let's go to our next question from Eduardo Duarte. Eduardo, we are gonna open your mic, so you can ask your question. Eduardo, you can proceed, please. Eduardo, you may proceed. Eduardo's question: What are the main challenges for 2023? What are the main relevant investments for the year? What can we expect from the results of the first quarter? What are the main challenges? Political and economic scenario. We can see some sort of uncertainty from our clients, retailers, distributors, and that impacts the selling volume. They are not buying increasing their inventories. It's not happening in a fast way. We can see the growth in selling in the division one brands, especially in the Magazine channel and in the retail channel.
Store channel, re-retail channel. What are the two other main investments, I can say that we are complementing investments in the expanding at the Crato factory to increase production capacity of EVA. We also have investments in modernization and equipment for optimization in the manufacturing processes. Apart from that, nothing exceptional. Nothing that's gonna change the trend of reinvest what has been depreciated, decreased.
We now close the question and answer session. We would like to give the floor to Mr. Alceu Albuquerque to the final considerations.
People, thank you so much for your presence here. If you have any other questions, myself and my RI team are available. Please get in contact with us. The video conference related to the fourth quarter of 2022 of Grendene S.A. has now ended.
The investor relations department is available to answer any other questions. Thank you for all the participants, and have an excellent day.