Good morning. Welcome everyone to the M. Dias Branco Results Conference Call for the first quarter of 2022.
Today with us we have Gustavo Lopes Theodozio, Vice President of Investment and Controllership, and Fabio Cefaly, New Business and Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. After M. Dias Branco remarks, there will be a question and answer session for investors and analysts. The webcast is also being broadcast simultaneously on YouTube at the address www.youtube.com/ri_mdiasbranco. Let me mention that forward-looking statements are based on the beliefs and assumptions of M. Dias Branco's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future.
Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of M. Dias Branco and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Gustavo, who'll begin the presentation. Gustavo, please go ahead.
Thank you. Good morning to everyone. Welcome to our video conference. Want to start with the highlights. In this first quarter, we had BRL 1.9 billion in net revenue, which also represents approximately 27% more than in the first quarter of 2021, with an expansion not only of volume but also of average price of our products. We increased our market share in all categories, biscoitos, massas, and crackers.
Which means that our pipeline of new products. We increased our pipeline of new products with this outstanding for wheat flour and for the domestic market at a more premium price, with several attributes which Fabio will show us going forward. We've maintained the gains in productivity and efficiency, which were captured in the last two years. We had an expansion in the EBITDA and the net revenue. We generated 2.5 times more cash than in the first quarter of the previous year. Our leverage has increased in relation to last year, basically due to the JSCPs, extraordinary JSCPs. However, in levels that should diminish with the generation of cash, as you can see in the company.
Our AAA rating is stable, with a stable perspective reaffirmed by Fitch for the fourth year in a row. We remind that our commitments of SG&A by 2030. Like, before passing over to Fabio, I'd also like to mention our strategy, which is growth with profitability, and basically through three avenues. One, the growth of our current business. We wanna sell more and better in the right channels with the right prices, with the right portfolio, and with good margins, and with a high level of growth in that area which we already operate. The second avenue is the internationalization of the company for two reasons. One, because we have an important impact on commodities in dollar, and our revenue is very concentrated in reais.
It makes sense to diminish this risk. Also because looking at these current categories, at some point in time, we could have problems with the CADE due to concentration of market. The third avenue is the growth through new categories, always looking at margins, profitability, added value, and connections with the consumer. All of this is supported by a productivity program and efficiency program. We wanna grow with more efficiency, ESG and with adequate ESG guardrails and a very controlled program so that we can be able to do this always with profitability. I'm now gonna pass it over to Fabio to continue with the presentation, and then we'll come back for the questions and answers. Welcome.
Good morning. Thank you, Gustavo, for the introduction.
I'm now gonna look at the details of our results in the quarter, and after that, we'll open up for the session of questions and answers. Let's start with the growth of net revenue. First information is that our net revenue grew by 27%, compared to the same quarter of 2021. In this quarter, we exceptionally opened the results month by month, January, February, and March, to demonstrate that there was a constant evolution, a significant evolution over this period. The revenue of March was 78% higher than the revenue from January. January was a month which was a weaker month, and we observe a strong recovery over the quarter. The same perspective is foreseen when we break down the volume by volume and by average price.
In the quarter, volume grew by 5.4%, with a favorable evolution of 46%, between March and January. The average price grew 20%, went from BRL 4.2 per kilo to BRL 5 per kilo in first quarter 2022. We also had an evolution, a positive evolution of the average price during the quarter. Looking at the revenue of first quarter 2022 by category, we have some information here which is relevant. First, when we look at the revenue by category, we see that there has been growth in all categories. More than 30% in cookies, 23% in spaghetti, macaroni. In margarines, 32%, and in wheat flour, 14%.
In other categories, cake mixes, et cetera, with a growth of almost 50% in these other categories. The average price grew in every category, 19% in cookies, 15% in spaghetti, pasta, and in wheat flour. It grew in everything except for margin, but the increase in prices was more than enough to compensate for the falloff in 13% in volume. Another thing that we wanted to say that is relevant is the fact that the volume of biscuits and pasta grew more than other categories is a gain in mix, a favorable gain in mix in terms of average price, since we have the best prices and the best margins in the categories of cookies and pastas, especially in the cookies category.
This evolution, this positive evolution in the first quarter represented a recovery of market share in the three principal categories, in cookies, pastas, and wheat flour. This in the perspective which would be sequential. Between the fourth quarter of 2022 and fourth quarter of 2021, we recovered share, and then in the fourth quarter of 2022 in all three categories. In cookies, we also had a growth year-on-year with a close of 33.5% share volume in the first quarter of 2022, compared to 32.5% in first quarter 2021.
This expansion of share between the fourth quarter of 2021 and first quarter of 2022 in the categories of cookies and pastas affected what we call our attack areas, which are the regions of the South, Southeast, and Center West, as well as in the area of defense, which are the regions in the North and Northeast. What's evident here in the next slide, in slide number eight, is that we see that the revenue in the area of the defensive areas grew by 29%, and the attack area this year grew by 27%. In other words, this growth of revenue for our average price and volume was very consistent. It was not concentrated in any single region. It was something that happened in the entire country.
The innovation, as in the previous quarters, has presented a contribution, a very positive contribution for our revenues. Looking here at specifically the products, the new launches of cookies, there was a growth of 25%. This value of BRL 59 million represents gross revenue and the results of cookies released in the last 24 months. This reinforces our focus that the launches have an average price which is attractive, in the majority of cases, above higher than the other products which are already in our portfolio, with margins at least equal to the margins, the equivalent products in our current portfolio.
Another example mentioned by Gustavo in the introduction, looking at the category of wheat flour, was the beginning of sales in March 2022 of wheat flour, Adria Flour, which is a premium brand, which strengthens our strategy of expansion in the attack areas. Remembering that Adria is a brand which is very relevant, especially in the area, the attack area, in pastas and cookies and toasted cookies, and also goes into the domestic market of wheat flour. It brings important differentials, purity. It's a very clear, very white, extra fine and enriched with vitamins. The average price followed the tendency in the previous quarters, closing at BRL 5 per kilo, higher than the previous quarters, BRL 4.2, BRL 4.4, BRL 4.8, BRL 4.9, and now BRL 5 a kilo.
Beyond the readjustments of prices which were necessary during the last quarters to recompose our margins due to the increase in costs, the new products have also had an important contribution, as we demonstrate here in these examples. Snacks with the Piraquê brands and which were launches last year. Cookies covered with Chocowafer, with the Piraquê brand, cookies with the Vitarella and cookies with Piraquê brand. It's a renewal as the motor to increase our prices and consequently our margins. We continue with the plan of investment in marketing, focusing on the principal brands. Here are just two of them, two examples of initiatives which happened in the first quarter with the Piraquê brand and with the Vitarella brand in various media, in the traditional media, digital media, and other events as well.
In channels, it's important to remember that M. Dias Branco operates in all formats of retailing. In 2020, with the second and third quarters of 2020, we had a team that was 100% dedicated to e-commerce, which is a channel which has, even though it's very relevant in our results, the market share that we have in the traditional channel is the same as our market share in e-commerce. If the channel grows in Brazil, which we believe at some point in time will happen, our brands have shown to be very competitive in this channel. In the year-on-year variation, our revenue went up 80%. We added a new partner in this period. We have a plan which is a very bold plan and very well structured for growth in this channel.
Our exports continue at a high level, and when we look at a horizon, a longer horizon of 5 years or even more, we are structuring a business for export in 2015. We have results that are much higher than at that point in time. It's grown by double digits every year. In its first quarter, we sold BRL 32 million, which is a little below in the last year and a little bit less than in the fourth quarter, basically due to certain factors. The first is the question of international freight, which is much, much more expensive. We're facing much higher prices, which wound up holding back certain types of business.
In 2021, we had some sales of wheat flour to other countries in South America, which is a category which shows itself to be very promising, but still doesn't have the same constancy of the biscuits, cookies, and pastas. This contraction was more conjunctural and structurally something which will continue to grow and has shown itself to be very promising in terms of revenue and margins. Going into the revenue and looking at expenses and costs, starting with the gross margin. We closed. Going to this slide, the right-hand side of this slide, we see the quarter with a gross margin of 26%, a result which is very close to the same period last year.
It's important, however, to show here that the positive evolution during the quarter, just as in revenue, where we had a March which was much better than January, the same thing happened with our gross margins. Beyond the higher volumes of massas in January, we were able to equalize the situation of the increased costs and price adjustments to compensate these increased costs. Our expenses are very much under control and at levels which are inferior to those observed in recent years. We closed the quarter with administrative expenses and sales expenses with 21% of net revenue, compared to 25.9% in the same quarter of last year, a level which is very close to what we saw in the last three quarters of 2021.
We maintain, as we were asked in recent calls, that if we really believe that this reduction of the level of costs has come to stay, and we said, yes. It's the result of all the effort which has been made by MGS over the last two years with a series of projects which have reduced the structure of our expenses and costs. Evolution of the EBITDA margin has accompanied the gross margin, and we closed the period with 4.7% EBITDA margin above the same period last year, and a favorable evolution also during the quarter, closing the month of March with 10% EBITDA margin. Looking at cash generation, debt and investments, our generation of cash, operational cash, went up by 2.5 times, closing the period with BRL 27.9 million.
Noting that the principal lines of working capital we improved year-over-year in payments, an average payment period of 42 days from 35 to 42. A slight increase in receivables with an improvement quarter-over-quarter and an average period of inventories went down. Our inventories went down and is lower than the same period of last year. It's normal to have a consumption of working capital between the fourth quarter and the first quarter of the following year. We invested BRL 50 million in CapEx. An amount which is 23% above last year. Our leverage measured by the net debt ratio of net debt to EBITDA was 1.4 in this quarter.
As Gustavo mentioned, this increase of leverage was highly influenced by the distribution of JSCP extraordinary, which were distributed and paid in the first quarter in BRL 500 million. It's much under control. It's a low level of leverage. We believe that with the generation of cash, which is typical of M. Dias Branco, that this leverage can reduce itself in the coming months. To close our presentation, we'll go to the chapter about ESG. In the beginning of this year, we approved in the board and we published through our annual report our new agenda of sustainability of M. Dias Branco, which represents a new cycle. Our first agenda was designed and communicated in 2014, and last year we revisited our agenda, and we included several themes.
It's always good to revisit this and to refresh our memories on this subject, 'cause there are themes that have evolved with new themes that have come up. We decided to prioritize 15 different subjects, which by 2030, these 15 subjects will be organized in three basic pillars: care of the planet, believing in people, and strengthening our alliances. Water, climate change, waste, fighting waste, diversity and inclusion, sustainable supply chain, and we looked at all of the goals in the new report, which was published a few weeks ago. Here's our the principal indicators. We have, following this dynamic of looking at the three pillars, indicators, new indicators such as the reduction of waste of finished products, loss of inputs in the product, women in leadership, serious accidents, and buying from local suppliers.
In the quarter, we're gonna give continuity to these indicators, but always following this new dynamic. Here's a few other highlights in sustainability which happened during the quarter. We adhered to the Brazilian Business Council for Sustainable Development. The donation of food partnerships with SENAI. We received the Selo Empresa Irmã for the work done, donation made to Irmã Dulce and the health program and the work safety programs that were implemented. Here we close this introduction, and now we can pass to the section of questions and answers.
Thank you. We will now begin the questions and answers for investors and analysts. If you would like to make any question, please push the Raise Hand button. If your question has already been answered, you can please leave the line clicking on the same button.
Please, wait while we put together the questions. Thank you. Our first question comes from Guilherme Palhares. Guilherme, pode falar. You can speak. Go ahead.
Good morning. Thank you for the questions. I have two questions here. One, speaking about the average price, when we look at the performance and we see that the prices have gone up, can you give us a little more detail of what really has been priced to the retailer and the client compared to mix and the strategy of the size of packaging? And how much this, in fact, is bringing and helping to the performance, both in volume as well as revenue? The second question, speaking about costs. We saw that your costs, especially for wheat, went up greatly with the curve of the market, especially in March.
We saw the price went down from the highs of February, but it's still stabilizing at a much higher level than it was pre-war. What do you imagine in the way of catch-up of prices in the wheat market? And also if you comment on vegetable oil for the rest of the year. How much more margin compression and cost pressure can we expect over the next nine months before this scenario?
Okay. Thank you. This is Fabio. Thank you for the two questions. I'm gonna start here. Looking at the question of price, you said mix and price readjustments. All three were important because of strategic questions. We don't open all the details, what was the contribution on each area, but I can tell you that all three had an important role.
The question of packaging is still something that's happening, especially in the category of cookies. It's a process which is being done in a way which is gradual and very cautiously, so that we can really address a question of accessibility for the consumer and also protect our margins and our average price. However, it's a process which is still underway. It was never finalized. The mix has always had a role, an important role in this quarter. Looking at this year-on-year, the total volume of MGS grew by 5.4%, and the volumes in cookies and in crackers were 8% and in pastas 7%. It shows the strength of our brands and our power of reaction. We've had quarters which were more difficult in terms of volumes.
At the end of 2020, in the beginning of 2021, we started a process of recovery, generating positive results in both price and volume. This reinforces that our strategy is giving the results we hoped for, and we're on the right road. The last variable that you mentioned, the question of our pricing, our price table, is also a tool, an important tool and necessary, and it's being used in a very gradual way to avoid any type of disruption in the volumes. Differently from the first quarter of 2021, when we had an increase in prices which was more concentrated in the beginning of the year, this year, due to the volatility which is still present in the market, we're making increases which are more sequential increases in terms of subcategories and channels.
The increase of average prices, just to close this point, it didn't come from one of these variables. It came from all of them. I would add even a fourth, which is innovation. We know we've had several semesters when we focused on innovation in products of greater value added with higher average prices and with margins that are smaller or the same than those that are equivalent in our portfolio, of equivalent product in our portfolio. Thank you for that. Thank you. Just to go into the second point of the costs. The wheat, we understand, and we don't expect any more big spikes in wheat prices. However, the prices are still under pressure, and so we don't see much of improvement during this war scenario. Last week on Friday, India banned exports due to internal inflation.
They were 6% in Chicago, price went up 6% in Chicago. We see some volatility, but in this level, nothing like what we saw, the spike that we saw at the beginning of the war and the beginning of the pandemic. This is our vision, both for wheat as well as for soybean oil. Or, palm oil, I'm sorry. Just to understand, when you talk about there'll be no more spiking in the market prices or in your average prices, your average costs? The average cost of the first quarter, do you think it will remain stable or do you think you're gonna have a discount in relation to the market prices? No. Today, we have two protections.
One, our capacity to stock raw materials, and the others are the hedges that we've done over time in the Chicago Board of Trade, which has protected us quite a bit. Palm oil in Dalian. This does not eliminate the impact on our costs. You can protect yourself a little bit, delay it a little bit, but we do expect to have increases in prices and costs over time. We have had still working with stocks from last year. The new harvests are starting to come in this end of the first quarter. Since wheat prices continue to go up and palm oil continues to go up as well, the average cost of our stocks should also follow this tendency of going up.
Not in a very high way that we saw last year, but yes, they will go up following the tendencies of the global market. One last point on this subject. You could tell me, how much longer do you think that you're covered? Especially on the wheat, at this level, which is a little bit more comfortable. Can you give us a little detail on that? If we didn't have to buy any more wheat, we would have enough to go through next quarters. It depends a little bit because the wheat from Argentina, the revenue is not the same as the wheat from Canada or the United States. We should have new products coming in at higher prices starting now, May, June. This will change slowly, this average cost.
We've got a lot of stock, but I'm going to have new material, new inventory coming in starting in May, and so we'll see this cost slowly rising until the end of the second semester. I also wanted to add one thing to what Gustavo said. The impact on margins is the relationship of these two questions, price and cost. This year, what we've seen is that we have a better balance between the two variables. The cost came in quite a bit before the prices, and this year we haven't been able to address this, making the increases, the adjustments at the right time with the exchange rate hedges, with our stocks on hand, taking advantage of the opportunities that have appeared.
Both I would say that the results were more balanced and in relation to these variables. Let me mention an important point here, talking about price and about costs as an important component of profitability. I would say that for M. Dias Branco, the biggest component is volume. If you look historically, this first quarter is a much more challenging quarter than the others. When we have a quarter that's bad in volume, the second quarter gets much better, the third better yet, and then you have a fourth quarter, which is more or less.
Since M. Dias Branco is a company which is highly verticalized with different levels of productivity and has important fixed costs, when you start to see an increase in volume, the dilution of these costs, all these fixed costs that are due to M. Dias Branco's structure, this has a direct impact on our margins. Obviously, the cost-price relationship is always more relevant in this composition of gross margins. However, in our case, volume is a game changer. It's very important to have this third variable as a point of attention, if you just look at the history of the company.
Okay, thank you.
This is Fabio. I'm gonna read the question that I received from Felipe, an analyst from Scotiabank. The question with three parts.
The first, can you speak about the disposition of the controllers of M. Dias Branco to allocate capital for the purchase of stock, both the repurchasing of stock as well as the purchase through family vehicles, when the evaluations, the valuations seem attractive compared to historical levels? Second, does the company see this as an M&A that adds value? And how do you balance the message, emitting a powerful message to the market? The third part, the controllers explore the possibility of closing the capital of the company, bringing it private, or are they firmly dedicated to maintaining it as a publicly held company? Thank you, Felipe, for these questions. First, the controllers, the purchase of stock by the controllers, the company can't speak about that.
We understand that this is happening due to the price and the evaluation of the controllers and of the company. The price, the current stock price, does not reflect the potential of the company. What's happening right now, we imagine it's having on the controller side, and we can imagine it's having on the company side, because we have also a plan, a repurchasing plan which is active and have operated in the market with a certain frequency. The idea of reducing the free float, the company continues to fit in the rules of the Novo Mercado rules. If for any reason we no longer qualify, we have tools to make it happen. Whether in whatever way it would be necessary.
We'll correct any at the right moment, if this should happen, that we would no longer fit into the requirements of the Novo Mercado market. The agenda of going private is not under consideration. There's no internal agenda, no discussion underway, no provocation. It's not on the table. However, with the price that's very low, there's always some partner or another says. But internally, the company is not considering that thing. We'll use the equity markets, the financing markets as a source of resources. We do not have this agenda of going private internally.
Reminder, to ask a question, just push the raise hand button. Our next question comes from Lucas Ferreira. Lucas, go ahead.
Hi, good morning. My question is about the elasticity of demand.
It goes along with the comment you made about volumes, which is an important variable. When we look at your monthly numbers that you've shown, it's implicit that we're gonna have an improvement in some margins. I'm not sure if that means 10% in the second quarter, but it could be more. It will be an increase going forward. When you mention that the costs are going up, what is the scenario for you to be able to repass these costs through your prices? Do you think you still have to pass these prices along over the medium to long term to cover the costs? How do you think the consumer will accept it? How do you think that the competition will behave? Last year was a more complex. You raised prices, lost share, and then share has grown now.
How do you see this dynamic for 2022?
Okay. Thank you, Lucas. We haven't yet seen any elasticity in relation to these increases. The elasticity that we've seen is totally related to our competitors. If everybody leaves, this elasticity is not very clear. If one goes and the other one doesn't go, then it's clear. It's what we saw last year. MGS went ahead, started to price things before our competitors. In fact, at levels higher than our competitors did and lost share. At the end of last year, the company had to price things, we saw this clearly through the Nielsen prices, and MGS to operate to gain market share. It's very much related to the movements of the competitors.
We didn't see a great deal of elasticity from the consumer in this direction. From the consumer, the movements, as you can see in our materials here, we've changed quite a bit our strategy of pricing, contrary to what we've done in the past of having very few lists with big increases. We're doing it in a phased way now. A little bit of an increase here per month, per channel, per region. It's a more balanced approach without big ruptures in prices. What we perceive is that it's worked very well for us. In fact, right now, what we are seeing is that prices have arrived higher before costs have gone up, due to our strategy of stocking and hedging.
We understand that the relationship of these costs today, even with the commentary, as we said, where wheat continues to rise, we understand that the pricing will follow the same rhythm to increase, to improve even more our prices in March. We're very confident in this strategy of pricing. With these volumes, we understand that historically, they've been very different from the first quarter, that there'll be an improvement in the coming months. Gustavo, looking at April and what we have for May, you're maintaining a profitability close to the levels of March by defending, as far as defending margins and so forth.
We don't like to talk about the future, but we believe that the two months that have already. We're already in May, so these first two months have been coming very strongly. We've been doing very well.
Thank you. Very well.
Our next question comes from Henrique Brustolin. Henrique, your microphone is open. Please go ahead.
Good morning, Gustavo, Fabio. Two questions from my side. I'd like to hear a little bit more from you about what caused this change in volumes and margins, especially at the beginning of the first quarter, thinking about top line in January. Along this line, thinking about the market share, are you growing even with a weaker volume in January and February?
There could be a difference between sell in and sell out, but how do you see the performance of the industry in this beginning of the year? How do you think that MGS will compare to the rest of the industry in the case of the sell in side? My second question, the prices of flour and meal on a quarter-over-quarter, it seems that you've fallen behind even though it may be more commoditized, that the price and the wheat price comes through quicker. This category specifically could hurt your consolidated margins. What do you see in the way of industry-wide in that area?
Okay, Henrique, thank you.
Speaking a little bit about the market in the first quarter, it's a market with better volumes, where you have usually lots of big costs at the beginning of the year. Sometimes trying to put their products. Volumes are lower for everyone. It's not a phenomenon of M. Dias Branco. They have people traveling, they have people on vacation. All of this brings the market to sell less. So much so that even though the volume has been smaller than in the fourth quarter, M. Dias Branco gained share. Which is a proof that it's not an M. Dias Branco question, it's a question of the market of a market dynamic. In relation to wheat, flour, and meal, these are two categories that M. Dias Branco prices almost daily.
We've lost a lot of volume in the B2B market, but which is a much more dynamic market because we will not sell for prices that will hurt our margins. What we see at some moments is not pricing at the same velocity as MGS. We think that since we've had the use of this flour for other products with higher added value, it doesn't worry the company. As a strategy, it doesn't worry us.
Thank you, Gustavo.
Thank you, Henrique.
The question and answer session is now ending. I'd like to pass it over to Gustavo to make his final comments. Gustavo, please go ahead.
Just to thank you all for the participation. Once again, our IR team is at your service.
We're very trusting that, in the execution of our strategy, we have no doubt that we're on the right road. We've had a quarter that was a little bit weaker. As I mentioned, the volume has impacted greatly on the gross margins of the company. We're certain that the strategy is working well. The sale of our richer mix, a better mix, is going well, especially for our brands like Piraquê, these other brands as well. Also, our average selling prices, as you can see month-on-month, we're growing month-on-month. It's not a growth that's coming only from pricing, but also from the day-to-day operation.
We have constant analysis, and this is very much due to the portfolio, which today we have a direct link with our salespeople, with our strategies. The products of changes in packaging sizes, which will all become realities in June. We have a strong cost control with a good hedge stock and SG&A at the minimum levels of MGS. We've done a lot of work in 2021, which were questioned if we would maintain the same level of SG&A. We are maintaining it, reducing slightly, but things are going well. We're moving forward as much as possible with the right mix, expenses under control. Once again, we think that we're very optimistic in relation to the operations of the company in the future.
Thank you very much, and we're at your service, and we'll speak shortly. Thank you very much. Have a good day. The M. Dias Branco's video conference is closed. We thank you for the participation, and have a good day.