Good morning. We are here again to present Multi's quarter results with Ale, our CEO, Leo, our CFO. Before turning the floor to Ale, I just want to give you the messages. I looked at the disclaimer we had in our presentation because we talk about future projections, so it is important to have a read at our last slide. If you have any questions, you can either open your microphone or join the Q&A queue, and we will answer everyone. Ale, you can begin.
Thank you, Juliane. Good morning. We are going to talk about the results of the third quarter of Grupo Multi, now officially renamed. Multilaser now is Multi. We finished the first heavy media campaign, the largest media campaign that the company ever did, so it is really interesting to talk about it. First, revenue was the main point of frustration for us.
We were coming with a strong growth. We tripled in size in two years, and we had that doubt. Will the company continue to grow gradually, organically, that little bit that we had expected, or go back a little bit to get to a more normalized level after tripling in size, or are we going to remain flat? This year we were prepared for small growth. However, we are moving sideways in terms of revenue. We will see why later. There is a very specific issue in retail, with large retail and electronics. But we made BRL 1.1 billion in the quarter, a 4% reduction compared to the second quarter and 6% year-on-year. We are talking about 30% more than 2020 and a lot more compared to 2019, that was pre-pandemic. The flat revenue is a pain point because the company was prepared to grow more.
There were certain assumptions that, we cannot tell the future perfectly, but we saw the market in the middle of the year that was not supplies. They were reporting lack of inventory at the stores. About to start with the Renda Brasil program of BRL 600. A lot of factors that could have warmed up the retail, but that is not what we saw. Retail remained weak in the third quarter, and it will remain weaker in the fourth quarter. It has been a very prolonged weakness on retail. Almost all channels grew. We had, as I mentioned, governments that postponed a lot of businesses because of the elections, but it is less concerning because these are in-house. Even though they have been postponed, they will occur in the coming months.
The pipeline today is of BRL 1.5 billion, more or less, of businesses that we won with the government, with the auctions won and in the name of our company. Now we need to drive this. With the election, everything stopped. Everyone was waiting to see what was going to happen, what the transition was going to be. Now, in the fourth quarter, there is probably something coming, and a lot is going to spill over to next year because these are budgets that go up to December 2023. The package that was approved has to be spent by December 2023. A lot in cities, but the majority is in the state governments. Domestic retail, that is the main pain point. As we will see, government has a small drop, but there is a lot to come. But national retail went down this year.
Our highlights in revenue is the growth in screen tablets, security, Smart TV Box, kids and sports. There is a variety. You will see that the new lines, the variety that Multi has, all of them have grown, this diversification. Our pain is concentrated in electronics, in two specific families that are important and that squeeze the result. Gross income had some recovery, 340 bps, an improvement of gross margin, in part due to the mix that I talked about. It is less national retail, an improvement in gross margin, a healthier product mix. That is the mix that sold most compared to electronics that are a little tighter. Direct to consumer, our own e-commerce delivers a much, much higher margin, so it pulls it up and gains in share. On the other hand, you also see that below the gross profit line, there is more commercial expenses.
You sold, but those sales for larger retail had to put a lot of money in for the turnover. There is an increase in commercial expenses, like budgets, rebates. That is going to offset a lot of this margin. EBITDA, we had 11% margin. A drop compared to last year when we were at the full pandemic period. Some non-recurring events. We also had about BRL 20 million in non-recurring events this year. So EBITDA of BRL 124 million. A small decrease quarter-on-quarter due to the non-recurring events. Looking at revenue, what I mentioned, it remained flat looking at the last 12 months. The last 12 months number in 2021 is full pandemic. It was exactly all those favorable winds during the pandemic. What did Multi do post pandemic when the market was already overloaded? We delivered some things.
We released new families to offset the two families that suffered the most. We wish we would have delivered more. We were fighting to get to double digits, but we are below, and that was frustrating. Of course, we still have the fourth quarter to work hard.
But I wish this number was higher so that on the fourth quarter we could reach double digits. But it is harder than we expected. The margin is tighter, 400 bps year in margin squeeze, due mostly to this higher competitiveness in the market, more discounts. We need to reduce prices to sell. The market is overloaded. All manufacturers, everyone I talk to in the industry is on the same page. Looking at the quarter, we see this margin improvement compared to last year, better than the third quarter, better than the second quarter, and here a little bit lower in terms of total margin.
I am sorry, revenue. This is in terms of revenue, as we mentioned in the previous slide. EBITDA is much lower than last year. We have 6 points of difference. Out of these 6 points, remember, 4.5 were margin. What explains the EBITDA margin? 4.5 points is the drop on gross margin. A fair number would be something halfway. The pandemic period is not typical for our industry. It was a lot higher net profit, EBITDA. We always stress this in all calls. It was a non-recurring event. This is a little bit lower. The fair EBITDA, in my opinion, in the long term, would be around 15%, 14%. That would be a long-term fair EBITDA for this industry. Another important point, in addition to the 4 points in gross margin, we made a heavy investment in brand.
If I am not mistaken, we invested BRL 70 million in a major campaign, a little bit more than 1% of revenue. That by itself is another 1% of the EBITDA. In the long run, we believe this will be an excellent investment, so it will not repeat in the quarter.
Of these 6 points of the EBITDA drop, 4.5 is margin and 1.5, more or less, is the media campaign. So 6 of the 6.6 points in difference, that is the explanation. It is a journey that we entered into, investing in the Multi brand. We never invested this much. All other investments pale in comparison, but it is being discussed. There is a lot of buzz. People are seeing it, and it is shaking up the brand image. It is a long-term. It is not that you spend BRL 70 million and it returns on the following month. It is a long-term project.
Now looking at the quarters. The third quarter, we combined or added a lot of the tax benefits. The financial credits for R&D was in the third quarter last year. This is not recurring. We talked about it last time. You need to look at all the other quarters together. So it would be more or less BRL 135 million here, and this quarter was only BRL 60 million.
So we had some tax credit for later, and that is the difference. There is BRL 130 million here, but here there is only BRL 60 million in terms of tax credit. So if you see the net result, it is going to be BRL 180 million compared to BRL 120 million. Here we had about BRL 80 million in credit, so that explains the EBITDA. We loaded less credit now, and that goes straight into EBITDA. So there is a big drop here, and that is the explanation compared to last quarter as well.
Net income follows the EBITDA. We are talking about 7.7 points less. 6 points referred to EBITDA, and one is financial expenses. Most of it is FX variation. There are months when, or quarters when the foreign exchange helps us, and in other quarters, it is a hindrance. If there is FX variation, we remark all accounts payable, imports payable, Chinese suppliers, and so on. So it can drag us up or down. This year in the first quarter that we do not have on the slide, but on the first quarter, we had 17% of net income, and we told you that it was mostly FX variation. On the second and third quarters, we had FX loss. On the third quarter, we had about BRL 45 million of FX cost. That explains these two quarters here. The income was low because of that.
Otherwise, it would run closer to the EBITDA level. On the long run, our income is 150- 200 bps below EBITDA. That is normal. That is what you should expect of Multi. If the EBITDA is 12%, net income should be 10%. If it is 11%, it should be 2%. If it is too different, it is because of foreign exchange. But it will recover. It can be higher, as we had in the first quarter. I do not remember the EBITDA, but the net income was 17%. So here on net income. Here is a very important point, the sales by channel. As I mentioned, we are going to see growth in small and mid-sized retailers. Even with a tight market, struggling consumers not going to stores, we had a 7% growth. Domestic retail had a drop of 33%, even though it grew 77% in the second quarter.
The story here is, in the first half of the year, nothing happened in national retail. Everything was locked. We saw that they had a loss in fair prices very strongly, and the impression we get talking to them is that the funding source dried out. Fares went down, and now they are seeking cash. They are not buying anything, even if the stores are out of stock. To some extent, it also spilled into small and medium retailers. Part of their growth in small and medium retailers was taking share from large retailers. In the first half, we were at around 48% below in national retail. It grew a little bit in the third quarter. We were expecting a recovery. Retailers were promising us that they were going to buy, and they did, but almost 80% more than on the second quarter.
Nothing that offset last year that was extremely good. It went down 33% and is the big villain. Now, 15% of our revenue, it went down to 6.5% in the second quarter, recovered to 11%, but it is still far from its fair share that would be even more than that. Because Multi is a company that focuses greatly in small retail, they could sell more than that. Government is also a villain, so to speak, because they delayed a lot of the purchases. This year, compared to last quarter and to last year, we had 23%. Multi has a pipeline of auctions that it won that is larger than last year. We could have delivered more. It is won, but last year, there was no election. We had an election this year, so everything was postponed. Our inventory stops. The goods are ready.
It is a matter of making these orders flow effectively, and it is hard to make forecasts and promises because it depends on a lot of red tape and procedures from the public sector. But we are optimistic that in due time, this will be realized, this BRL 1.5 billion in business.
There is always more businesses coming in, right? There is new business. I am happy with the pipeline, unhappy with what we delivered in recent months. ISP is growing at a double-digit rate. It is very good. Corporate with a small growth. That is positive because the majority is for memory components to other manufacturers, so we have been able to maintain the business. The big surprise for me that I think is extremely important for Multi is the strong growth in D2C. We are 50% above last year. Note that D2C was 4% of revenue, went to 7%, went to 6%.
There is a small drop here compared to the second quarter when it was very strong. But D2C is growing in the year about 60% year-on-year. For me, this is great news because the margins are much better on D2C. We can speak directly to consumers. We can deliver door to door. We rely less on the channel's moods, so it is quite interesting. Another thing interesting about D2C, there is an important Brazilian retailer that is well known, and they are buying from us BRL 10 million less than ideal. So we lost BRL 10 million in sales with them. But our D2C is making BRL 6 million at the same retailer through marketplace. It is interesting, right? They are taking the foot out of 1P and migrating to 3P because, of course, they have capital costs. There is no risk of inventory. They gain with take rate.
For us, the margin improves incredibly working on 3P. It is a win-win relationship. Of course, BRL 10 million is more than BRL 6 million, but in terms of margin, I think I am happier selling BRL 6 million in 3P than BRL 10 million in 1P. Of course, they also have brick-and-mortar stores, and brick-and-mortar stores, we are struggling. We need to recover 1P. Our 3P is very strong, and I think it is a trend there. We are very well-structured to continue to grow, delivering this type of growth in 3P and D2C in coming years. I hope this is great news. Remember that Multi already has retail and non-retail, but from the retail block, our D2C is already 10% of revenue and almost 20% of contribution margin. You see how important this business is becoming.
The breakdown on revenue, you will see that the pains are in the national retail and government delays. Per family of products, we have, as you know, 15 business units. To make it simpler, we break it down in four major blocks. Three of them are growing. Multi is getting more diversified. Office and IT went up, and we will see why later. Home products as well, and kids and sport also grew a lot. You can see how robust it is quarter-on-quarter. Double-digit growth in all of them. A very specific pain on mobile devices, basically two products, smartphones and PCs. We will see later why, and you will understand where this point of pain is and the perspectives for recovery. Basically, we are relying less and less on mobile devices and becoming more diversified in new families.
Following our vocation of being Multi as we had planned and we were working for it, the kids and sports line now is double digits, a very healthy line with more interesting margins. Mobile devices. Basically, we are talking about PCs and tablets and smartphones. Tablets are okay. It is moving sideways.
PCs and smartphones are our points of pain. What is the main factor here? In our view, the markets during the pandemic were saturated. Families bought their PCs to use, smartphones. They spent a lot of money of emergency support, and the parks are new, so they are not renewing their equipment right now. This will come at some point, but right now, there is greater pain in retail. If we look at the last 12 months here, you see this is precisely the full pandemic, BRL 1.9 billion compared to BRL 1.6 billion, so it is an important drop.
Steeper when you compare the third quarter of 2021 that was still strong with the third quarter of this year, going down compared to the previous quarter. Due a lot to governments that made those delays and retail. It is a perfect storm because retail goes down and government goes down. That is all government buys pretty much. It is this block right here. 98% of what the government buys is PCs and tablets. The market is also going down. The IDC numbers show that PCs are painful for all manufacturers and smartphones as well. There is a drop of around 15% in the total volume of smartphones, and PCs even more than that. In office and IT supplies, moving sideways compared to in the last 12 months, and now starting to grow this quarter. Basically, what happened with PCs happens with IT supplies as well. Everybody was equipped.
They bought mice and webcams, cables, routers for their homes. There was a strong drop in these accessories that is very important for Multi. We offset this with other areas. For example, security, stationery, and office supplies, and of course, internet providers. Internet providers is a line worth about BRL 1 billion, a very solid channel that has been growing. It offset all of that, and we were able to maintain revenue and grow a little in the quarter. On home products, we have robust growth, 15% year-on-year, 23% quarter-on-quarter.
I am very happy with this line. Basically, we have screens. The major hero here is screens. As a curiosity, last month, Multi's main family was screens, our main source of revenue. Speakers go down, portables and healthcare growing, and automotive dropping a little bit. This line is increasingly more relevant.
Displays for computers and monitors made in Extrema. We are migrating to Manaus.
Manaus factory is already producing, this will accelerate. We will migrate all the production of screens and videos to Manaus, where the factory is already operating. We will take the lines from Extrema to Manaus. Finally, the kids and sports segment is very varied, diverse. We have toys making a good number, sports growing, pulled by a big hero, that is DJI. We took on DJI's distribution in Brazil, and we increased their revenue very well. We are going very well on D2C for DJI, running excellent launch campaigns, making millions on the first day. We are also growing in baby products, growing a lot in pets. DJI drones and pets are pulling this line, and we are growing in wellness as well, even though the base is small. Wellness is our exercise equipment for pets. We have the manufacturing.
We got the machine now that is going to triple production of pet mats, and we can expect more growth here as well. This growth of 51% is really good. You see that this line is consolidating. There is already significant double digits in the company, growing quarter-on-quarter and year-on-year. Finally, the highlight projects. What is our line? We prepared to grow double digits. We stocked up. This was not what happened. In fact, we need to focus on cash now, but without losing the strategic investments that are halfway through their pipeline to unfold. What is Multi going to do now? We are going to put cash as a priority, not first line. We were focused on top line. Cash was second place, so we inverted this. The first two quarters is to generate cash, reduce inventory.
That is going to be a strong movement, and we have a lot of actions to do that. At the same time, maintaining those strategic investments that we believe are crucial for growth. I will list here very quickly the most important ones. We are in the final stages. In the first quarter of 2023, we are almost there to migrate to SAP, a project with a total cost of BRL 40 million. Pretty much all of it is paid for. We are very anxious to turn key successfully. Of course, it always hurts a little bit in the beginning, but I am confident that it is going to be good, and we will remove this cost application when it starts running. We will have a lot of gains from it. The warehouses in Extrema, we are expanding them, that is the pipeline.
We have a very large factory with satellite warehouses in other points in the south of Minas Gerais state, and we need to rent and pay for security, transportation. There is a series of costs involved. Now we are doubling costs because we are consolidating it.
We are going to have our plant with three new storage warehouses with 6,000 sq m, 8,000 sq m, and 10,000 sq m, the three warehouses. We are going to bring a lot of products that are outside in-house in one external warehouse. Instead of having six locations, we are going to have only two locations, and that will significantly decrease logistic costs. We are almost 2% more than revenue in terms of logistic costs. Look how inefficient due to additional inventory than needed and this coming and going of goods. It is 2% of that, 200 bps on the bottom line due to logistics.
Of course, a lot of it is due to freight that increased, but at least 100 bps we will be able to gain in logistics by simplifying this. It is a large investment, but that will generate great efficiency. The plastic injection plant is wonderful. The equipment is coming in. The home appliances are imported today. Their plastic pieces are imported today. That is a lot more expensive. We are going to have local production. We ran a study, and the payback is expected within a year and a half . All the equipment, the savings in parts that we consume today, the payback is in 1.5 years. I like this type of investment more. Of course, we need to make the other investments as well.
But when you invest money where you have already guaranteed payback to verticalize something or remove costs from the base, we are more comfortable than making an investment that will maybe generate revenue as a new business. That is going to be great. We are investing a lot in the D2C team.
We have a very strong team, and we are investing in technology, partners, marketing to grow our D2C. We are working with a project to double D2C in two years. That is the challenge that they will face. We call it the one big project for 2024. That is the challenge the D2C people will have, to make BRL 1 billion in 2024. We are halfway there. We also doubled the lines of screens, expanded production. We are taking it all to Manaus. Routers, we are increasing production from 100,000 to 200,000 routers per month. We need to double the industrial park as well.
The partnership with ZTE, that we are leaders in Brazil in products for providers. Next year, we will have the capacity for 200,000 pieces per month in routers. The other type of investments that I made, we are still making those investments. They are much smaller in terms of share. But in Manaus, we are building the motorcycle factory. We rented a warehouse close to the free zone of Manaus. It is not that close. It is 13 km away. We are going to manufacture the electric motorcycles. There is a lot already arriving in Brazil. They are already assembled. They are all sold. There is a huge demand. We are launching four new models. We have orders placed for five models of motorcycles. We are very excited. We have a lot of franchises and dealerships registered.
There are about 40 dealerships already registered with their orders in hand, and the idea is to expand the e-motorcycle.
In Manaus, we're also going to make the bikes and scooters at the Watts plant. The marketing campaign at around BRL 70 million, most of it was in the third quarter. Now we're in the support campaign, so every month we're going to maintain a small amount of money to keep the brand fresh on consumers' minds, and next year we'll come back with new campaigns. A lot of influencers. We have Cafu, Ronaldinho Gaúcho, Whindersson Nunes, Gabriela Prioli, Wesley Safadão. We had Jorge & Mateus. This is all very new in the history of our company. I admit that after many years of underinvestment, we had that question whether or not we had money to do that when we were small, but now we're finally investing. We're talking about 1.5% of revenue maximum. It's not irresponsible, out of the box, or anything like that.
From what we see in the market benchmark, no company with a good brand, respectable brand, invests less than that. So we're basing ourselves on our peers and closing this gap of marketing investments. The existing partnerships, as I mentioned, DJI, Hikvision, they're going very well. We started to manufacture Hikvision now in September. So this month of November, there will probably be a very strong ramp-up. From what I understand, we need to double Hikvision's sales to meet our targets. DJI is going well as well. Everything that comes in is sold. In terms of numbers, we have those two clear pain points for PCs and smartphones. They're important families. They were the two largest of the 15 business units. They're two of the largest, and with a strong drop, but everything else is growing. I believe this tends to normalize.
We are competitive in these products. We talk to customers, and they're not talking about loss of share. Yesterday, I was talking to a large regional network, a chain, and they're saying that we're maintaining share in their supplier ranking. It's just a matter of how the market is tight. Now talking a little bit about this focus on cash. Our inventory level is quite high. So we have a COGS of around $45 million a month. We now have a more restricted purchasing policy. We reduced inventory coverage in one month, in 30 days, and now we're still getting estimates of purchases. We want to buy between $15 million-$ 25 million per month for the next four months.
If we're consuming $45 million and we're going to buy $15 million-$ 25 million, we'll probably burn around $25 million of inventory per month, which will bring great cash relief, about BRL 100 million a month in terms of cash generation. That's the main point. Another important point is the tax credits. We have a lot of credits, and there's a series of initiatives to use that. I would mention some things in the pipeline. The migration of screens to Manaus. Due to tax structures, when we migrate screens to Manaus, we'll generate less credit. Direct imports through Minas Gerais will consume more credits. That's a second measure. We have some reimbursement actions, but that takes time. We're looking at some strategic acquisitions that are businesses that complement ours, verticals that consume a lot of tax credits, and that will also help. The integration of GIGA.
GIGA Manaus is a separate company, and we are planning to merge next year, and that is also going to consume a lot of the tax credits. There are four major initiatives, each one of them consuming a lot of tax credits. With that, I thank you all for your attention, and let's open the Q&A. Can you please open Andres' audio? He wants to ask a question live.
Good morning. Can you hear me?
Yes.
Great. Good morning, Ale, Leo, Ju. Thank you for this opportunity to ask questions. I wanted to have better view of the maintenance scenario, so to speak, of maintaining sales for 2022. You are working with a stable scenario for sales in the year, but when we look at the fourth quarter, that would imply a very fast growth. In your view, what would be the main drivers to sustain this growth? If you can also give us some color on Children's Day, the sales on that sense would be interesting as well. Thank you.
Okay, great. From live questions. For next year, we are more grounded with our feet on the ground. There is a new administration. We do not know what the economic policy is going to be, the main line, who is going to be minister in the main chairs. Children's Day was not very strong. We expected it to be better. The turnover was below last year. The fourth quarter is always stronger than the third. Now is the month where we have the Black Friday sales. November, at this point in previous years, we would be making huge sales of items for Black Friday. All customers would be stocking up. Oh, let's take this opportunity and that. But I do not see that today.
Really, for quite some time, we had not seen a market so stuck. When I talk to clients, we ran a series of actions for offers. Oh, this product is not selling. Let's put a 20% discount. No, I have mine here, and I will run my Black Friday with what I have in stock. A lot of people were doing that.
A large retailer I was talking to, one of the top three, planned Black Friday 20% below last year's. They are planning below last year. So we are cautious. We are going to focus strongly on D2C. We have a list of 900 products that we set aside for Black Friday. Two-thirds will be run in our own D2C because a lot of retailers have not embraced the products. Usually, they replace what they sell. If they sell 10 pieces, they will buy 10 pieces. They are not really betting on it.
If the Black Friday goes well now and retailers sell what they have stuck in inventory and feel the demand, there should be a good replacement afterwards, but I am not counting on that anymore. We were optimistic when the year began, and it was not what happened in the third quarter.
Great. Thank you, Ale.
I am going to answer Marcelo's question here, and if you are going to ask live, I will call you. Marcelo Affonso. Good morning. Last quarter, you said you were taking measures to reduce the level of inventory. However, inventory increased this quarter. When should we see the results of these measures? Is there a risk of part of the stock becoming obsolete? Yes, Marcelo, indeed. Last quarter, what was the difference compared to now? When we got to June 2022, we were looking at a very bad quarter.
Retail was saying, Oh, the inventory went down now. Renda Brasil government allowance coming in, the second half of the year coming in, it's going to ramp up. We had a target to grow our revenue, burning inventory within that target of growth, and the target did not occur. We had a target to make 20%, 25% more than what we did. Why didn't it happen? Because of the government postponements and the retailers not coming in. For government, we are at BRL 700 million in-house. That's the inventory we have for government alone of auctions one. What's the risk of it becoming obsolete? In theory, there's no risk in this case because these products are already locked in BRLs we bought. The suppliers are paid, and the government has a contract in BRLs that cannot be adjusted. They can't say, Oh, the market went down.
We need to readjust the price. That cannot happen. This is okay. Once these products are gone, there's already BRL 700 million of our inventory gone. On the retail side, electronic goods, PCs, and smartphones have a little bit more risk. But the majority of our inventory is products that don't really have price drops. They're accessories, IT supplies, toys, baby items, home appliances. That's the contrary. There's going to be an inflation. The dollar is going up. Most of the market is priced with the U.S. dollar at $5. Now that it's going to $5.4, if the statements continue as we see, maybe the U.S. dollar will continue going up. So we may even have a gain in inventory. It may even be positive being all stocked up with the inventory paid in BRLs.
If I'm not mistaken, we have BRL 2.1 billion of inventory in-house and BRL 1 billion in transit. So it's 2/3 in-house. The healthiest would be to have half and half. Ideally, 40% in-house, 60% in transit. We have more than 60% in-house. So we're all the way up, and that's bad. It generates a distortion. We pay more for storage. You have more tax credits involved. Everything that you paid at import, you took credit. So it's BRL 2.1 billion plus all the credit that was paid for at customs that accumulated in the tax credit balance, some BRL 100 million . If you combine that, there's a lot of cash. So I don't think it's a critical risk. It's not highly relevant. Anything that becomes obsolete will be offset because of the FX variation. What did we do different now?
We don't have this optimistic view of expectation of growth, and we reduced coverage in another month. People who bought for seven months buy for six. If they bought for eight months, they buy seven. So this shaving of 30 days makes a huge difference in our levels of inventory. Thiago, live question. If you can open his microphone, please.
Hello. I just opened. Can you hear me well? Hi, Ale, Ju. Thank you for the opportunity to ask you questions. Thanks a lot, and thanks for the presentation. The presentation was excellent. Honestly, all the companies that I've covered, if they could make a presentation as complete as yours, it would make our work a lot easier. But my main question is regarding mobile devices. Honestly, all of the other lines, I think they have a trend, either within expected or positive.
Nothing too different, but mobile devices was weaker. You said very well, you talked about the channels. Just to get the message clearer, at least for me, there is a part of this that is government and a part of this that is large retailer, right? I cover hardware in other geographies, Apple, Microsoft, and their message, especially in the PC market, has been very negative around the world. So this effect of either pull forward or macro supply chain has been punishing or penalizing. We have seen the Microsoft guidance. We talked to Microsoft this week. It is not an effect only in Brazil. Since there is government in the middle as well, and it is a very specific dynamics, I would like to maybe separate these things. If you can talk a little bit about the two things. I think the government is more and more relevant.
So this effect of large retail should be smaller. That is my understanding. Correct me if I am wrong. If you can also talk about what you see. Of course, there is still Christmas coming. World Cup is complicated. If you can talk about this dynamics of this market that are the most sensitive ones, smartphones and PCs, with more detail, I would thank you greatly. I am sorry for asking such a long question. No, it is excellent. As you said, there is a global issue in PCs especially.
International brands are dumping in Brazil a lot of goods that are left from other regions. A lot of regions are having a hard time selling PCs. It is cyclic. People bought a lot, so now they are postponing consumption. We recently had one of our peers who released their information, and they had a drop of 49% in retail sales, this peer of ours.
Our drop was smaller. In retail, we are around 20% below our retail sales in many categories in electronics. So that is how the market scenario is. Our line receives compliments. It is first price. It is affordable smartphones. We have Multi entry products. We have intermediate, and we have Nokia. In the beginning, we saw both selling very well during the pandemic. Post-pandemic, Multi continued to sell well when Nokia was not, and now it is the opposite. Nokia is being more accepted, and we are struggling more to sell Multi for a factor that I think is even positive because we always invested on Multi as an entry level phone. So it is a 3G cheap phone, BRL 500. Nobody has that product. We are the only ones that fell on this niche. Smartphones for BRL 399, BRL 499.
If they break their cell phone, someone with less purchasing power that only want to use WhatsApp, the most affordable cell phone is ours. There is no other in the market, and we have always been the lead in this area. But this cell phone is already getting out of use.
People do not want it. Now we have our intermediate cell phones of BRL 800. They are selling a lot better, and the cheaper ones are slower, and Nokia is fitting in well, especially in the medium retailers. Retailers depend too much on two brands, and when they want a third brand, they are investing more on Nokia. For PCs, we have the Ultra brand. That is our own brand. We do not have an international partnership on PCs for now.
Great. Thank you for your answer, Ale.
Now from Gustavo, from XP. He is asking what we can expect in terms of margin. What would be a normalized level? Do you still see low teens as a feasible level?
Yes, Gustavo, I think an average between the last 12 months of 2021 with the last 12 months of now would be the feasible level. That is what we saw pre-pandemic numbers. So as a rule of thumb, making no specific promises, 14% of EBITDA with 12% of income, with a margin of 1.5% up or down is what should be expected of the company, 14% with 12%. It is not 17% that we had in the pandemic, and it is not what we have now because it is below. It is not a normal number. It is a hangover figure, so to speak. So the 14% and 12% is what we should seek, 1.5% up or down as margin. D2C growth has been attracting attention, but the channel is very focused on few categories.
Do you consider increasing the mix? D2C, direct- to- consumer.
What do you mean few categories? Gustavo, if you want to add live. Okay. Our D2C is very diverse. I was looking. We have a product mix where every month I control the different items that are sold on D2C. Basically, today we have 6,000 items in total on Multi, including things that are not retail. But every month, our D2C sells 4,000 different items. The retailer, premium, excellent retailer, great partner that buys everything, will buy 500, 600 items. If you think about a complete IT supply store, they will buy 500 different items. Our own store, if you go to multi.com.br, but if you go to the website, we sell 4,000 different items per month from all of our families. In the marketplace, we have Amazon that buys pretty much 2,000 items. Other marketplaces, 1,000 items.
B2W, Via, 1,000 different items every month on their 3P. So it is very diversified. The percentages are not the same as in retail. So really smartphone, small percentage. But interestingly, if I talk about the families that sell most in our D2C, screens first. Baby is the second place. Sports is the third. So the mix changes a lot. But it is really cool, and now what we are doing is investing more and more in exclusive items. So that is the big novelty. The exclusive items in the beginning of the year responded to 10% of the D2C volume, and today it is already at 35%. So 1/3 of what we sell on D2C are products that we call closed circuit. They are developed only for D2C. You can only buy those products from our hand. If you go to, for example, an electric fryer.
If you put the code, you are going to see in all the stores all over Brazil, it is everywhere. But you are actually buying everything from Multi, all of them. You place the order, and the inventory comes out of Extrema, either via Magalu or own store.
Our D2C today is plugged with more than 100 different partners, banks that have closed programs, mileage programs. When I mean technology, that is what I am talking about. You launch a product, you register the price, and the next day it is available all over Brazil, and everybody sees that as a product that is a market product, but it is always in our hands with a controlled price and healthy margin. That is the beginning of the journey. We are launching more and more things in this called closed circuit. TVs, the demand for Q4. TVs are doing well. There is a lot of turnover pre-World Cup.
The Toshiba brand is well accepted. It is being considered equal to the premium brands in the market, and the Multi brand as an entry-level brand, and they are both selling well. Definitely next year, there is going to be a squeeze. Maybe on Q1, we have a strong sale to replenish inventory, but we are already projecting smaller numbers for next year. We will not get too carried away with TVs. We need to make it up now with a comeback of electronics that have been stopped this year. Excellent. We had few questions today. Does anyone have any final question or last-minute comment? Open Thiago's microphone again, please.
I am sorry. I did not want to ask another one to avoid taking over the call, but thank you for giving me this opportunity for another question.
To understand logistics and costs, commodities are still quite high, and that was also heavy for the costs. If you can talk a little bit about what you are expecting looking forward for this line. If it is to be stable or to grow, that is a component that could help margins to get to a more normalized level. Thank you.
We had a container level in China of $2,000-$3,000. With the pandemic, it went up to $13,000, and now it is less than half. Containers are going down. There was the inflation in dollar as well. Maybe $4,000 would be a fair cost for a container from China to Brazil, 40 pieces, high cubics.
Ale, just to follow up quickly, because China also had that event of closing and then opening government. Is it too volatile as well? Maybe one or two weeks that they closed down. Does it affect it? Or because they are brief periods, it does not really affect you. I mean, it is a more linear to down trend.
So far, it is not really affecting us. They shut down because they work for cities. That is their system. Citizens have an app, and the app is either green, yellow, or red. You are at your city, Shenzhen or Guangzhou or other parts of China. That city has 20 cases. Shenzhen has more than 20 million inhabitants. It is 20 cases, and then they shut down or lock down Shenzhen. Everybody in Shenzhen, the app turns red, and they cannot go to other cities. The cities around it are operating normally. Then two weeks later, they go back to green. It is a different story.
We sent a team to China, so they underwent all the proceedings to be able to go there and work, and it is unreal to see what is happening there.
It is almost sci-fi level. I can tell you, if you want to come and visit for coffee, I will have the pleasure of telling how unreal the situation there is and how tight they are at controlling movement, COVID, quarantines. It is almost a prison for people who get there. International logistics, I do not think is an issue today. I would love to believe that it is going to improve margin and so on, but that adjusts for the competitors as well. I will not promise anything. Domestic freight as well, the cost went up, and now we have renegotiations, new contracts, and so on. Logistics, as I mentioned, we were working with 40,000 pallets of inventory pre-pandemic. The company tripled in size.
In Extrema, we have more than 90,000 pallets, so we tripled the number of pallets, the amount of room we need. We did not have room in-house. It takes time to make this CapEx. So that generated a spillover of costs. There is about 100 bps to improve margin in this internal organization. So it goes to the bottom line. It is not a competitive value. I want to believe competitors have their spaces. Not everyone is renting spaces.
Very clear, Ale. Thank you.
From Rafael here, how is the development of that sales?
In theory, it is beautiful. We have zero sales. I sold BRL 0 of motorcycles, but none have arrived. The first ones will arrive by the end of the month, and they are all sold. We have a plan. We just got an order of $4 million, and we are intensifying it. So for Watts line, we are launching W125, the basic motorcycle.
We are getting W160 after that. We will have a trail, a scooter, and a more premium bike that is a motorcycle with 200 km of autonomy and so on, and everything between BRL 20,000 and BRL 30,000 of sale price. I am feeling optimism.
A lot of people are interested in being our dealers. So in all cities, we have a small, medium, and large model for dealership size. We are changing our own store to a larger store in Faria Lima in São Paulo to have a large Watts stores. We will have technical assistance. We will sell motorcycles on the website as well, corporate sales. I do not want to give you numbers because the plan for next year is not closed, but it is going to be an important line. It is not going to change the company's history in 2023. It is going to start to really make a difference in 2024.
If we go from BRL 0 to BRL 100 million in 2023, that is what is not going to change the game. But it is a line to get to as high as BRL 1 billion.
From Marcelo, The restrictions from the U.S. to the Chinese semiconductor industry can impact Multi?
No, Marcelo, we believe that so far there has been no effect. It is unlikely that this restriction would apply here. We have not seen any effect. Chinese products, if they have restrictions there, they will sell to Brazil. They sell in China, partners in China and in Brazil. The more prominent players that were restricted, we do not work with them. There is a large Chinese player that has suffered strong restrictions, and we do not work with them. Our ZTE partner had a problem in the past, but that was sorted many years ago, and the others have no influence.
Also from Marcelo, When the plastic injection plant will start producing?
Our forecast is January. Wonderful. So we are within our time. Being almost British, we have started at 9:00 A.M. and are finishing at 9:58 A.M. So that is it. To sum up, we wish we had delivered small growth. It did not happen. We certainly could have done a lot better. A lot of it was a strong market. You see the peers. We are in line with our peers that are publishing their earnings result. The pain is concentrated specifically into project products, so that generated inventories levels above ideal much more than I wanted, and we want to see a reaction next quarter. You need to ask me and expect from me a strong improvement in this situation. Even if it is just reducing inventory and imports to payable, it is a reduction of indebtedness.
Either if we have cash improvements or reduction of indebtedness, I need to deliver it on the fourth quarter. Otherwise, you can get at me, and we'll wait for the facts on the next quarter, okay? Thank you, everyone. Thank you. Have a great day.