Good morning, ladies and gentlemen, and welcome everyone to Panvel Group video conference to discuss results relative to Q4 2024. This video conference is being recorded and a replay facility will be made available at the company's RI website after the event. The respective slide deck can also be downloaded. Our participants will be in a listening only mode during the company's remarks. After that, we will have a Q&A session when further instructions will be provided. We have simultaneous translation into English and to Brazilian Sign Language. If you need that facility, just click on the interpretation icon in the bottom of the Zoom screen. Before moving on, forward-looking statements are based on beliefs and assumptions on the part of the company's management, and also on information currently available.
Forward-looking statements might involve risks and uncertainties as they refer to future events, and therefore depend on circumstances that may or may not materialize. Investors, analysts, and journalists should have in mind that macroeconomic conditions, industry conditions, and other operating factors might lead the results expressed herein to be different from those expressed in the forward-looking statements. Joining us today, we have Mr. Julio Neto, CEO, and Mr. Antonio Napp, CFO and IRO. I would like now to turn the conference over to Mr. Julio Neto, who will start the presentation. Please, sir, you may carry on. You have the floor.
Can you hear me all right? Good morning, everyone. It is a pleasure to be here for our earnings announcement for Q4 2024 and for the full year 2024. This is water under the bridge, of course. But as we are talking about the full year, we have to go back in time and talk about what happened in Rio Grande do Sul state in the south of Brazil, and which is dealt with in the next slide. It is now on your screen. If you please direct your attention to it. The heavy floods, a true catastrophe in human terms, in material terms, a very serious situation. It hit hard thousands of people in the southern part of Brazil. And because we have a very strong footprint in Porto Alegre, Eldorado do Sul, cities which were highly impacted, we are also impacted. And of course, that is reflected in Q2 2024.
But of course, the impact was spread throughout the year. If we exclude Q2, we would have had a wonderful year across the board in terms of sales growth, numbers growth. But that was a "penalty" we had to pay in Q2, and which unfortunately affected numbers, but we are now turning that page. It also had some impact on our cash cycle. It was a difficult moment. We had to resort to wholesalers, find new ways to operate our logistics because we were for 40 days, we could not use our main DC in Eldorado do Sul, our distribution center. We had to resort to Curitiba's DC and also some other wholesalers, and of course, affected the balance of our cash flow. But as I said, that is water under the bridge. The second half of the year proved to be quite prosperous in terms of sales growth and bottom line.
In Q3, for example, we could already see that recovery. We closed the second half. Looking at the second half of 2024, we look at a growth of 17.4% on top of the previous half, the second half of 2023, actually. A very robust growth and the fact that growth reached close to 18%, 17.8% of growth in sales. We see a similar dynamics in Q1 for 2025. That has to do, of course, with the right measures we took in terms of expansion, in terms of the focus we have been placing on the sale of medicine, which grew by 20% last year, over 20% last year, and also a focus on our distinguishing strategies, our digital front, which has become even stronger. Our own brands are also an important vector, driver for that, for our growth.
In summary, the highlights for Q4, we had this growth that I mentioned, something close to 18% in sales. Gross margin, which is also a good driver, increased by 14% vis-à-vis the same quarter of last year, the previous year. An important highlight for the quarter was the growth in mature stores. Our concept for mature stores are the stores which have been operating for more than three years. You exclude from the base stores which are still ramping up, right? Mature stores grew by 12% in the quarter, way above inflation. The numbers have been growing at a higher pace. Actually, in the quarter, we managed to increase EBITDA by 19% when compared to Q4 2023, 19%, one nine, a quite healthy sales growth, which proves that our strategy, be it through digital or physical channels, that strategy has been quite efficient.
In summary, for 2024, retail revenues topped BRL 5 billion, and retail revenue is important. Our wholesale operation closed last quarter. It was a natural consequence. The shutting down of our wholesale operations was a natural step. The share was very, very small. From [ASCA], everything we have with the flooding, logistics, that front was no longer that interesting. Our efforts going forward will be focused exclusively on retail. For a time, we'll see some numbers still related to wholesale, but here on end, we're going to be focusing on retail numbers, which are quite robust, by the way. If we look at the company's track record, that's extremely relevant because we're talking about a company with very few ups and downs. If you look back in 13 years, only the pandemic year had a slow growth level.
Since 2011, we've had a 14.5% growth in CAGR. In other words, a company that's moving always up and forward, and you can see that on the chart, pointing up always. Then the follow-on during the pandemic, a moment we called New Panvel, because we were willing to adopt a higher growth rate when compared to before through a more aggressive expansion mode, new physical stores and so on. It is a company that is well aware of how to benefit from this new pace. We are growing at 14.5%. As of 2020, it goes up to 17% in growth of gross revenue. It is a New Panvel, actually, without forgetting results. Bottom line, a CAGR of 19.2% from 2024, 19% of CAGR. Those are historical numbers. We're not looking at quarters alone or years alone.
We look at the whole picture, the long term, which shows the commitment of the company on continued growth throughout the years. Of course, driven by the fact that we are in a very prosperous market, a market growth at a tune of 10% a year, and we are growing more than the market, gaining share in all the states where we operate, with quality services, and of course, with a very conservative cash management approach, which also highlights of our track record and shows how solid the company is, even today when we have a slightly more complex macroeconomic moment. I will turn it over to Napp for him to go into detail about the numbers. Over to you, Napp.
Thank you, Julio. We are now going to be talking about the details along each of the entries of our balance sheet. We start with sales, and we are going to break down our main distinguishing factors. As Julio mentioned, sales was the main highlight of the quarter and also the main highlight of the second half, a growth close of 18%. What is behind all that healthy growth? Two main things: a strong growth in our existing base of stores and a strong maturation of our older stores opened back in 2020. All of that has led us to break record after record, quarter after quarter. in Q4 2024, for example, we reached the highest average sales of our story, BRL 750,000 . For that average sale, we include all the stores which are open starting in 2020, which are also then still maturing.
An important piece of data when we look at average sale and we compare Panvel of late 2024 to late 2023, the number of stores that today have productivity which is above BRL 700,000 per month increased from 34% of the base to 44% of our base. At the same time, the number of stores of low performance, sales of up to BRL 300,000 , that number is going down abruptly from 7% to 4% of our store base. That shows how healthy the business is and how healthy our investments have proven to be. The final piece of data, on the right-hand side of the slide, we have data from IQVIA. Panvel continues to be, actually is expanding the gap relative to other players, and we still remain as the player with the highest average sale in the southern region of Brazil.
As I mentioned, behind that, we have this exceptional performance of same store sales and mature sales, the ones which have been around for more than three years. When you look at that number for the quarter and for the year, it becomes clear that we are exceeding inflation rates by far, gaining productivity at the stores and reaching a level, on average, for 2024, of 12% of growth on average, same store. More than 9% when we talk about mature stores. That explains why Panvel has stood out and has been gaining significant market share. When we look at the expansion numbers, 2024 are also expressive numbers. We had a series of delays in our expansion plans in the second quarter because we had, of course, to focus right then, May, June, we were going to receive the restrictions. Our focus changed a bit.
Starting the second half, we resumed our growth pace. This is a company record. We opened 35 stores in a single half, six months. 21 stores in Q4 alone. For the year, 55 new stores, a record. Another important piece of data I have here to share with you and which helps us understand the level of maturity of our portfolio is that since our IPO in 2020, we have opened 276 stores. That is a lot of stores. We have approximately 30% of our store base still at a maturing phase. Still the numbers are there, and it is a clear signal that our margins stand to grow. When we discussed our EBITDA number for retail, that data, the maturation data, will become even clearer when we get to that slide in a moment. That leads to our market share.
We have reached a market share of 13.2% in the southern region of Brazil. It is also a record. We grew our share across the states, including in Rio Grande do Sul, where we are already present. We have really exceeded the level of 20% of market share with a special highlight for Santa Catarina, where quarter-on-quarter we have been gaining important market share points. It is also worth mentioning, we have already exceeded the level of 1% of market share in the city of São Paulo, the largest market in Latin America. Behind all that gain in market share, we have a gain in medicines, medications, which has been our focus because that talks directly with client-customer loyalty, and the main driver for growth has come through our generic and our own brand medications.
Of course, we are paying attention to other categories, but we understand that if we grow stronger in medications, it will be a key for us to achieve sustainable growth across the business. Here, talking about sales, we need to talk about what sets us apart and what leads our customers to come back with their business to us. Digital, of course, remains one of our main distinguishing factors. Panvel is a benchmark in pharmaceutical retail. We have once again broken the record. 22% of retail sales happen through our digital channels. A growth of 30% when compared to last year. We already have a very high base to grow on. 32% of market share for e-commerce in the southern region. When you compare that in general, we have 13%, that reinforces our leadership in the South.
In addition to a best experience in our website and our app, we are also different in our delivery ability. Panvel has the fastest delivery lead time in Brazil. 60% of everything delivered arriving at the customer's home in up to one hour. We are not including click and pick up. The click and pick up is not included. If we did it, we are easily above 80% of deliveries being executed below one hour. We intend to further increase and invest there because we know it makes a difference. Along with that, today we have an active client base, which is quite important. 43.8% of our customers, as measured by the MAU, are older clients, and the base is 6 million app downloads. That also reinforces our edge, relatively the competition. We intend to maintain that. Another edge is the services.
Panvel is an absolute leader when we talk about services and when we talk about vaccinations. We have 46% of the market share for vaccination in the South. The Panvel Clinic positioning reinforces our main purpose, which is to take care of people, and that is translated by our personalized service. We have hundreds of stores with Panvel Clinic, 99 rooms ready for vaccination in a total universe of over 500,000 consultations throughout 2024. Revenue from those services is close to 1% of sales, and even if we are talking about small numbers, they represent a very important growth avenue going forward. Once again, this is a fundamental client for us because they come to us for services, but they have a higher average ticket and they have more frequency, as high as 3x as much as other clients.
This is very important strategically, and that is why we are going to be continuing to invest in our Panvel Clinic arm. Now we have one of our yet another distinguishing factors, Panvel products. Throughout 2024, we suffered because of the floods, of course, only for our manufacturing plant that produces one -third of our products, 33%, was highly impacted by the rainfall. Production came to a halt for a few months and we, of course, lost products. That, of course, led to breakages in our supply chain. In Q4, we have resumed previous levels, normal levels of sales of our own product. We have reached 7.4% of total sales. For hygiene and cosmetics, we resumed the level of 17% of all sales. That is very important. That is a differentiating appeal for the customer. Those are exclusive brands, and they have, of course, a higher gross margin.
When we add everything, all the brands we use sell exclusively, we have Sanitas and Lifar and others. We are close to 8% of retail sales are under our private label market. We are a benchmark for the sector, for the industry. As we move out of this period, we will resume historical levels, and we are once again, remaining as leaders. When we look at market share for private label products, we have 35% of the southern region market. Once again, a piece of data that makes us all very proud. In closing for the numbers, I have to also, of course, talk about the customer experience. We have one of the highest NPS levels in the industry. We closed the quarter at 78, following our methodology. We continue to be the drugstore chain best assessed at the App Store and the Google Play.
Best score at Reclame Aqui, of course. NPS is something we look at every day at the stores. It is part of the target for all our managers, and we believe that one thing feeds the other. We can only continue to grow if we continue to invest in quality service, which has, of course, to do with taking care of people, customers, employees, and partners. Now, after I talk about sales, let us talk about gross margin. Let us go down an entry line in our financial statements for gross margin. We have to remember that with the end of the wholesale operation, we had a change in our business mix, and automatically that creates a very positive effect in the company's gross margin. As you can see on the chart, we grew from Q4 2023 to Q4 2024, 0.6%. In the year, we grew 0.8% or basis point.
That's an effect of us exiting the wholesale industry, which led the company's gross margin up, and that more than offsets the impact of the sales that we have in terms of dilution total expenses. When you look at retail gross margin, and that's something we're going to be looking at in the coming quarters, we saw some pressure in this past quarter. We moved from 30% of gross margin last year to 29.5% in Q4 2024. As you can see on the bottom line, bottom part of the slide. That was driven mainly by the strong growth in medications within the mix. The growth in medications brings about a lot of sales, but it also impacts gross margins.
Of course, you have to remember the high penetration of digital channels, all expected and more than offset by the dilution of expenses we've seen with the sale of the wholesale industry. We will continue to have success throughout the year. When you talk about expenses, as I mentioned, as we left the wholesale business, this happened in Q3 and Q4, expenses related to sales, they will worsen a little bit, but it's important when we look at expenses with sales involving stores, logistics, and some other expenses. Those expenses in the quarter, they grew only 12.5%, whereas retail sales grew something close to 18%, a very important level of dilution of expenses in relation to retail. When we look at admin expenses, irrespective of the wholesale expenses, they have come down a bit in Q4 when compared to Q4 2023, reaching 2.3%.
In the year, that 0.1% pressure has to do with the wholesale business leaving. Again, both expense levels are growing a lot less than retail sales. When that pace reaches a balance, this will become very clear. This movement will become very clear. When we talk about all those effects, the strong growth in sales, healthy growth margins, and health expense levels, of course, this will reflect in the result in our EBITDA have reached in the second half, sorry, in the Q4 2024, BRL 82 million of adjusted EBITDA, a record level in the company's history, reaching 5.7% in EBITDA margin, another record. When we look at the second half after the floods with the pure Panvel operation, it's clear that we have moved the company to another level.
We moved from a company that operated at an EBITDA level below 2% or 1% to a 5.5% below level. This is what we hope to see in the future. We are quite optimistic about that. So we are starting 2025 on the right track. The same behavior can be seen in the second half as a whole, where EBITDA numbers, the margin grew 23% when compared to 2023. When we look, and Julio did mention that earlier on today, when you look at our behavior throughout the years, it's quite strong. It has been growing since 2020 on an average close to 20% year-on-year, which is a clear sign of success. That success is quite linked to that information that you can see on the slide for retail EBITDA. Retail EBITDA is a specific result of our stores.
It's equivalent of the store's contribution margin, excluding depreciation. When you look at that indicator, it has grown significantly throughout the year, even with the floods. It grew from a quarter to another also. See that only the Q4 we grew by 0.8%, and in the year, we grew 0.9%. If we look back to 2020, when we started expanding up to now, we have moved from a margin, EBITDA margin, for the stores of 10% - 10.9%. Why is this important? For two reasons. After having opened 276 stores from 2020 until now, we have managed to mature all that store base. We have managed to improve our existing base. We have managed to change level in terms of margin, and that 10.9% dates back to the margin we had before expanding, when we only had mature stores in our base.
That indicator tends to grow further for a simple mathematical reason. We still have 30% of our stores is still maturing. As they mature, that indicator tends to go up. And that indicator also makes it clear the level of productivity that we're gaining at the store level. Once again, gross margin for the company in Q4 dropped 0.5%. If the store's margins grew by 0.8%, it means we have diluted store expenses by 1.2%, which is a quite strong number, and reflects the good job done in terms of personal expenses, leasing expenses, and all the other variable expenses for stores, thanks to a strong sales performance. Now, closing numbers. We've talked about EBITDA, retail EBITDA. We have reached net income. For the quarter, net income came to BRL 33.5 million.
In the half, the six months of the second half, there was slight pressure, as you can see. Net income for Q4, 0.2%, closing at 2.3%, basically due to a difference in income tax. Income tax in Q4 2024 was slightly higher than in Q4 2023 because we had more tax credits back then. It's a seasonal thing, and that's why it brings an interesting piece of data. Our income before income tax grew by 25.6%. In the six months of the half of the year, it grew by 41%, and in the year it grew something close to 12%. All very healthy indicators. And it's also worth mentioning how our net income has behaved throughout the years. We've seen a compounded growth of 14% a year for our income since 2020. A very strong growth, especially if you remember throughout the period, interest rates were also going up.
We managed to generate operating result and continue to control our financial expenses so that we could keep income growing to a tune of 14% a year in a very consistent manner. On the next slide, I'm not going to go into detail for each answer. Of course, this is all available for you to download and in our release. But just to wrap up our results for 2024, we did the same exercise when we closed the second quarter for the year. It's important to share with you the main impact coming from the floods and what the company's lot would've been if we could exclude those impacts. We had two impacts during that period. What we called direct impact relative to all the write-offs of assets we had, all the extraordinary expenses we had with our employees, donations, and so on and so forth.
We also had indirect impact. In other words, the loss in sales. We estimated between May and June 2024, we lost BRL 140 million that would've made a very important positive impact on our margin. When we consider all the effects, it's clear that from the EBITDA point of view and net income point of view, we would've reached even higher levels. We estimate that we could have an EBITDA of something close to BRL 280 million, equivalent of a 5.1% margin, and a net income of BRL 132 million in the year or a margin of 2.4%. I think that also reinforces why we understand we're now enjoying an uptrend from 2025 onwards. Now some more numbers. We talk about our cash cycle. Julio also mentioned early on we had some cash pressure late in the year, 11 days in our cycle. That's a temporary pressure.
Because of the flood, we saw our inventory levels going up. We had our inventory stopped, parked. We had to stop buying from our distributors as well. That, of course, came up in Q4. When we closed Q3 and throughout Q4, we worked to bring those inventory days down. To reduce that number, we started to buy a little less, and that impacts in the lead time for suppliers because you cannot extend negotiations in that respect. That's a temporary effect. Our inventory levels have been returning to normal levels below 100 days. Lead times for payments for suppliers are also going back to normal, and that piece of data will become clear in Q1 2025. That change in wholesale also brought a positive effect, which will linger, which is a reduction in the number of days for receivables.
We moved from a level of 30 days, and we're going to stabilize at a level of 27- 28 days, as you can see on the slide. In any event, another interesting effect throughout the year, we managed to improve significantly our debt profile. We have raised some very important special funding lines at very interesting low costs. Today, we close the year 2024 and start the year 2025 with a loan cost on average below CDI, which is quite important, and that reinforces that throughout 2025, we will, in terms of interest rates, be able to contribute in a more positive manner to generate net income. Now moving on to our strategy. We're moving towards the end of presentation, and I'd like to touch upon some of our strategic pillars to shed some light on what we did in 2024, and especially looking forward or looking ahead to 2025.
Number one, expansion. Physical expansion is a fundamental pillar for pharmaceutical retail and also our fundamental pillar. Everything starts at the physical store, and we continue to reinforce that we are operating in the best retail market in the country for pharmaceutical market. That industry has been consistently growing by 10% a year. In the South, it grows even more, 13% a year. Panvel continues to grow more than that, as I've just shown you. We continue to grow at a pace of 17% a year. So a lot of growth already taken in advance. If we add all the chains, they do not reach 50% of market share. So there is room for us to grow, and we are taking important steps in that direction. There is a clear signal of the population is aging, especially in the southern region.
People are getting older, and that is why our focus will continue to be in the south of Brazil. We continue to open more stores in Rio Grande do Sul, Santa Catarina, and Paraná. A lot of focus on going to the countryside and standard models. When we look at 2025, we want to continue to expand. 75% of the locations have already been prospected. We are quite consistent along that strategy. As you can see, we have a strong footprint in large cities. Cities from 100,000 inhabitants up. But even in those cities, there are opportunities. A lot of opportunities, especially when you go to smaller cities, 60,000 - 100,000 inhabitants. And some opportunities in even smaller cities. We have a footprint in 150 cities, and that number tends to grow in 2025.
This next slide, this 25, is quite important because it shows us consistent numbers about our expansion and numbers we have achieved. When we look at the results of our different years, and we have three different indicators to measure those vintage years. EBITDA is one of them, the maturity level is another one, and retail EBITDA, of course, and return, the ROIC. You can see we continue to have extremely healthy waves or vintages. But the main thing is this slide is the number of new stores by state. When we look at our performance in the state of Santa Catarina, Paraná, and São Paulo, year-on-year, we have been improving our performance. If we go back to that position, you can check the same presentation for Q4 2023.
You will see that in Paraná, we are operating at an EBITDA margin of 8.9%, in Santa Catarina, 9.4%, in São Paulo slightly a little above 5%. So in all those states, no exception, we have been growing and growing fast, increasing our level of confidence. And when we look at the number of stores that are still going to mature, Santa Catarina, Paraná, and São Paulo, that shows we can only grow even further year-on-year. And getting closer to our standard margin, which is in Rio Grande do Sul, is our reference, our benchmark. We would not be doing any of that if we could not look at our clients or consumers. That is something we do really well, I like to say.
We already have a huge pool of customers, 25,000 customers, and out of that pool, we will activate another base, reaching this quarter to something close to 7 million active customers. An active customer has made at least one purchase. When we activate a customer, we need to turn them into a loyal customer. A loyal customer will buy every couple of weeks, every 15 days or so. So active customers are growing by 7%, and loyal customers are growing also 7%. In other words, growing at a very nice pace. And it has to do with our digital strategy. We want customers to have our app. We want them to buy at the physical store, at our site, because this will generate more loyalty on their part. It is a positive, a virtuous cycle, if you will. We have an important look at the chronic patient and continued use customers.
Those are the clients who have, of course, higher frequency and higher average tickets. For 2025, a lot in stock, have invested in platforms. We are now going to invest in the Salesforce platform to further improve our database, our data collection. Then we're looking at the buying Panvel program. We have good news going forward to improve engagement and loyalty on the part of those customers. It's also part of that, our digital strategy. Our objective is to remain as a benchmark for the pharmaceutical industry, and we continue to invest. We never forget to work on the continued improvement across all sales channels. In 2025, we want to go even deeper in the WhatsApp platform. We know WhatsApp is the most democratic channel for customer relationship. Every customer has and uses WhatsApp, and the better our tools around WhatsApp, the best, including AI.
More sales, more recurrence, more frequency. Something we also mentioned before, we understand that fast delivery is a competitive edge. We already have the best delivery, but we want to be even better. We want to deliver even faster. We are going to invest in that because we want to continue to lead. When we talk about digital, I'd like to shed some light on a project, a very nice growth avenue we have, which has already provided very good results in 2024, and will provide even better results in 2025, which is our job around Panvel Ads. Even though numbers are still small, they've been growing fast, as you can see. Revenue growing by something close to 200%, an exponential growth as it should be. It is a platform which is quite received.
It ranks top 10 across several retail media platforms that monitor us and other retailers. We are totally posed and ready to explore websites, physical stores, the app, and whatever else comes up to offer our suppliers and customers this ability to convert communication into sales. Retail media is one of our main strategies for 2025 to continue to improve our margins. We have talked a lot about physical stores, clients, digital. Behind all that, we have people. Without good people, none of this would have been happening, but there's also a lot of technology. Panvel took a deep dive in AI and digital, but not just because of the beauty of it, but because of practical purposes. We understand that AI needs to be an integral part of the company to help in two fronts: sales and cost reduction. Simple as that.
In terms of selling more, we were pioneers in the pharmaceutical retail. We created Sofia, the first virtual assistant to service in pharma retail. Sofia provides the tools for our agents, for our agents to be able to better serve customers. Sofia also helped in training, clearing doubts, answering questions, and Sofia will now be turning towards the customers. A lot has also been done. We're looking at six different pillars around digital growth, which will be our guidance for 2025. We're looking at all works around pricing, sales mix, in-store productivity, inventory management, fraud, and turnover as well. Fraud prevention and turnover. That's very strategic for us, and we are here also leading the pack on that front. If you go check our app, you will have a very nice experience, I'm sure, along with Sofia. I would invite you to check our app out.
Bring your prescription. Your prescription will be dealt with, and you will have a very nice experience. Of course, the Panvel Labs, also an important pillar. We have 25 start-ups. We have a venture capital arm, quite important. We have already made three investments so far, one of which already providing returns. The labs throughout our Panvel On program has been a nice catalyst for entrepreneurial ideas. Several projects that emerged at the Panvel Labs are now materializing in the market. Our final slide, I would like to share with you some numbers and giving it back to Julio to wrap this up. Without wanting to repeat anything. We hope to have significant sales growth in the year. The first quarter has already been showing positive results. We are having important ramp-up for new stores. Stores that are maturing and showing great results.
For mature stores, we hope to see them grow significantly. We have been improving our inventory management work, mitigating breakage, and also, of course, improving our logistics. It has been improving significantly, not only by reducing costs, but also improving efficiency. That can be seen in the number of growth for medications, over 20%. That is not casual. There is a strategy behind all that. For the year, we can expect the launch of new products. Products that will impact the industry. Networks are changed as Panvel's has a very good footprint among the higher bracket of income clients. When we have Mounjaro, a new product to be launched in May, will affect those customers. For the year, we will still have the Ozempic, the generic Ozempic being launched. Those are two important launches that will really provide some traction to sales throughout the year.
We also have a challenge for repricing or adjustment of prices, which will happen on April 1st and will be below inflation. But the industry as a whole will be able to absorb that readjustment below inflation levels. I do not anticipate any problems for the main players. We continue to work on our mission of increasing margins through a very healthy mix in 2024. Even though we were able to bring the number up, hygiene and cosmetics could have grown a little bit more. Of course, private label, which was highly impacted by the floods. Our main supplier, ourselves, we were underwater for two months without being able to produce anything. So for 2025, we should see an important resumption in the sales of our private label products. That in itself will impact margins.
As for expenses, dilution will continue to be there, especially across stores, because the average sales should continue to go up as more stores mature. So average sales will increase, and with that, a diluted sales expenses. Admin expenses will remain at healthy levels. It is our commitment. I think we are the only company with the level of admin expenses that we have, 2.4%. Nobody else has that. The idea is to remain around that number. We will see what we would have seen in 2024 had it not been for the floods, an important expansion in EBITDA. With that, I close, and now we can move on to the Q&A session. Thank you.
We will now start the Q&A session for investors and analysts. If you have a question, please click on raise your hand. If your question has been answered, you can remove yourself from the queue by clicking on lower hand. Our first question comes from Mr. Tales Granello from Safra. You may carry on, sir.
Good morning, Julio, Napp, Ismael. Thank you for taking my questions. The first question I have about Q1 sales. Julio has mentioned something. I would like to understand what can we expect that growth. Is it close to Q4? Last year was a leap year. We had an extra day. We had a dengue epidemic, which was stronger. Also a question about working capital. You did mention in the release that with the end of your wholesale operations, you go back to different payment terms. Can you see any reflection of that on Q1? Thank you.
Thank you for your question. Starting by Q1 sales, Q1 2025. Very strong sales in the first two months, January and February, very strong level of sales. Looking at the market, we can see that the market as a whole is not growing at the same level, but we are. We have to wait for the closing of March, but in all likelihood, we will have a very positive Q1 in terms of growth, as I mentioned throughout the presentation. As for the working capital issue, yes, we already see a normalization of working capital levels in Q1. We will maintain our inventory levels below 100 days, have reached a balance again after the wholesale operation and the flood. We are already recovering, and you will see signs of that in Q1.
Q1 and Q2, which usually are quarters where we have strong cash consumption, you will see that consumption will be close to breakeven, showing that we have already found stability in terms of working capital.
Clear. Thank you.
Thank you.
Our next question from Mr. Vinicius Pretto from Itaú BBA. Mr. Pretto, you may carry on.
Good morning. Thank you for taking my question. I have two topics I would like to explore. Broader industry topics in terms of hygiene and cosmetics, we saw a loss in sales. I know there is a comparison basis effect, but a question we ask is about the competition with marketplace. The industry sometimes sells directly in the marketplace at prices below chain store or drugstore prices. How do you see that competition in the marketplace? Has that been a relevant topic for you? In your specific case, how do you see the private label role in that category to try and defend or hedge your margins? Number two, the readjustment in prices this year, it will be below inflation. How do you see EBITDA margin and gross margin behaving in this scenario of price readjustment?
Your question has an answer, which is very good, okay? In terms of hygiene and cosmetics, there is an issue with comparison business. If you look at the extended CAGR, it has been growing in line with medications for the company. If you look back at three, four years, there is a correlation, there is a good comparison basis. In our case, I will repeat, Panvel products had an important impact. We had breakages we had never seen before. Our main supplier was highly affected. As for the marketplace, for us, it is not really a source of concern. Panvel, unlike other players in the segment, Panvel has a home delivery model, which is very, very efficient. Nobody delivers faster than we do in the cities where we operate.
Our click and pick up, when compared to other players, is not very representative. For 2025, we will see an evolution, a further evolution. Our last mile project will now contemplate 15-minute delivery times, 20-minute delivery times, and we will increase the number of stores that will take care of that last mile. We have know-how in that area, and we understand that we are quite ready to face that. In the case of suppliers selling direct, we do not see that as an important threat because consumer mix usually includes more than one or two brands, and a supplier has only their own products. They cannot offer a more diversified basket of products to customers.
We do not see that as a threat. The impact should not be relevant in this case. The retail, in our case, physical retail, continues to be very, very important. We still see lots of people going into stores, walking into stores, very conveniently located, usually very close to customers' homes, parking facilities, parking spots, easy access. Hygiene and cosmetics has an important characteristic, which is the amount of launches we have. We always have new products, and a launch does not really link to an online environment, especially women. They do not only want to know more about the product online, they want to see it, touch it, experience it, taste it, talk to a beauty consultant. Physical stores for hygiene and cosmetics are very important.
We see now O Boticário, Natura, all of them going towards physical retail, opening new stores, trying to fill that gap, especially for Natura. They did not have physical retail. They now are going to the stores because they understand that for beauty products, physical stores are important. Panvel, not only for hygiene, but especially for beauty and cosmetics, we are quite distinctive when we compare to other pharma players, which are not really playing that game. They work in hygiene, but not so much in beauty or cosmetics.
Okay, I will be talking about the price readjustment, which Mr. Pretto also asked. As for the medications readjustment, starting on Monday, April 1st, Tuesday, it is below inflation, as you said, as we mentioned. Pharma retail as a whole has tools to offset that. We can work around pricing, discounts, offering different product mix to make up the margins. We are working with generics, OTC, and Panvel private label. We have tools to offset potential losses and readjustments. It came out a little lower than expected, of course. When we look at the inflation, it also affects costs. Our main weapons, if you will, are to continue to work around logistics, as I showed. We have been achieving very good productivity levels. Average sales continue to grow above inflation.
If we have an impact in collective bargaining negotiations or lease renegotiations, we are also going to try to renegotiate, and the good level of sales will help us offset those costs. Having said that, we continue to believe that for 2025, we need to continue to expand EBITDA margin when compared to 2024.
Thank you.
Thank you.
Our next question comes from Laryssa Sumer from XP. Please, Miss Sumer, you may carry on.
Good morning, everyone. Thank you for taking my questions. Most questions have been addressed. I just have a quick follow-up on Vinicius' question about those levers to offset this readjustment coming out at a lower level than inflation. You mentioned pricing, mixing, different mixes, and discounts. If you could give a bit more details. When I talk about pricing, on the release, you talked about a dynamic pricing strategy. If you could elaborate on that a little bit. In terms of the mix, we saw that this year was a year where prescription drugs grew significantly, and we understand you have that as a good resource. How can we expect that mix to stabilize for 2025 and also going forward? Thank you.
Actually, if you look at the balance sheets of all companies in the industry, you will see there is a discount line, which is quite considerable. The sector as a whole, not only Panvel, has an ability to absorb or a capacity to absorb increases below inflation that other pricing algorithms sometimes can't. But we see the competition already doing something. We have been including AI in pricing and in inventory management. Those are the areas they are focusing on, in addition to customers, of course. I think that's a non-topic, actually, not only for Panvel, for the industry as a whole. We will absorb, and unfortunately customers will foot the bill, but it's nobody's fault that Brazil is experiencing high inflation. The government is to blame.
Of course, we respect the competition, Laryssa, of course, but we are in an industry which is very important. It represents a very important need for consumers, and we have the tools to work. As for the mix, to your question, when we worked or planned for 2025, we expected a growth in medications as a whole, slightly higher than hygiene and beauty, but very close, slightly more. But in our view, we will have healthy growth both for hygiene and beauty and generics. Generics grew significantly in 2024 and private label as well, and that will help with the mix. And we will play another role. If pharma consumers, because of economic restrictions, if their wallet is suffering some pressure, what can we do? We can offer products of different price ranges.
That's also our role, working with the price and working with the mix. The consumer can come to our drugstore and buy a generic brand, which will be cheaper. We will find a solution that will meet their health needs and their wallets. We have the ability, the flexibility to do that. That's what we do every day, actually.
Okay. Thank you.
Thank you, Laryssa.
Okay, thank you everyone for being with us. And we continue, we remain confident for 2025, despite a macro scenario, especially the capital markets, not very optimistic. Our main enemy is CDI at 15%, but we do believe in the company. We do believe in our growth. We continue to expand. And as I say, Brazil worsens fast, but also improves fast. We are now expecting and rooting for that improvement.
Thank you all for participating, and we of course, remain available, the whole IR team, for questions, comments you may have. And have a nice weekend, everyone. See you next time.