Good afternoon, ladies and gentlemen. Welcome to Portobello's video conference to discuss the results for the first quarter of 2023. This video conference is being recorded and the replay can be accessed on the company's website, ri.portobello.com.br. The presentation is also available for download. Please be advised that all participants will be watching the video conference during the presentation, but then we'll begin the question and answer session when further instructions will be provided. The presentation will be held in Portuguese with simultaneous translation into English. Before proceeding, I take this opportunity to reinforce that the forward-looking statements are based on the beliefs and assumptions of the management of Portobello Group and on the current information available to the company. These statements may involve risks and uncertainties given that they relate to future events and therefore depend on circumstances that may or may not occur.
Investors, analysts, and journalists must take into account that events related to the macroeconomic environment, the segment, and other factors that may cause their results to differ materially from those expressed in the respective forward-looking statements. Before starting the presentation, the company will present a video about the results of the quarter. Net revenue of BRL 488 million. Internal market with a growth of 0.7%. Business units results. Adjusted and recurring growth margin and adjusted and recurring EBITDA. Leverage. Some highlights of the quarter. Present in this video conference are Mr. John Suzuki, CEO, Rosângela Sutil, Vice President of Finance and Investor Relations, and Andrés López, Manager of Investor Relations. I would now like to hand the floor to Mr. Suzuki, who will begin his presentation. Please proceed, sir.
Good afternoon. It is a pleasure to be here with you once again. I would like to thank you for attending this earnings video conference, where we are going to comment on the accomplishments and the data for the quarter. We have a new team. Since March, we've been announcing that there would be a change in the board of directors of the Group. You knew me, I had been the CFO of the Group until now, and now I am the CEO. We have with us Rosângela Sutil, who is now taking over as CFO, succeeding me in this position. She will present the financial results to us today. We prepared an agenda very aligned with what we have been doing in previous quarters. We'll start by giving you some market information, we are going to cover our operational and financial performance results.
We are going to give you an update on strategic projects, and we are going to address our perspectives for 2023. Let me start by talking about the market. Not just in this quarter, but since the mid-2022, we have been through more adverse times in our market, different from the experience we've had in previous years, when we had very positive results leveraged by the effects of the pandemic. Recently, we've been observing the effects of a weaker market. Since last year, and let me start by talking about retail, the retail market. This is information from the CLO index that covers specifically construction materials. Last year, we already had a 2.4% drop in this market. We had seen even larger decreases in the second half of 2022. Now in this first quarter, we've been seeing similar performance.
We really see that the retail market has been suffering a lot. At Portobello Shop, differently from that, we had a very good results. We had a 22.5% net revenue growth. This is one of our highlights for the first quarter results, which is aligned with our strategy and the priorities that we have established. Integrated retail is one of the major avenues for investment for us, and we are reaping the results of these investments even in a more adverse market situation. If we focus on the industry, as you will see in the next slide, we can see the performance of the Brazilian market for the industry data from ANFACER in terms of volume of sales to the domestic market of ceramic tile industry, and also the data from ABRAMAT that brings the deflated sales values.
Well, we considered at first that the market had gone back to normal levels because there was a boom in 2021 in our market. Last year, we said that these levels were coming back to normal levels. When we check the ANFACER data, we see a 17% drop in 2022. Those figures are below the data we had before the pandemic. The slide does not show the data for 2019, this is when we had a 15% less than the pandemic levels. This data does not even reach the levels we had before the pandemic. In terms of figures, we can see that our industry has weakened with a 6.9% drop in the first quarter.
Data from ABRAMAT relate to sales information or revenue information of our industries, and that would include information for Portobello and Pointer. We had a 0.7% growth while the market had a significant drop. This is an overall perspective of the market. We are going to talk more about our expectations for the future. Before I move on, and before I turn over to Rosângela so that she can talk about our results, I think it's important to say that even in this adverse scenario, we are very pleased with the strategies and the strategic path we have implemented. We say that, it's also important to connect those strategic choices with the results we've achieved.
Although it was not a result as strong as we've been having until the first semester of 2022, the results are resilient vis-à-vis the results of the market in general. This resilience is related to the strategic choices we've made over the years. Portobello Shop is the best example of that. A growth of over 20% while the market in general has had a decrease in the first quarter of 2023. We will see along the year, not this quarter, a significant benefit in our results because of the investments we've made. In addition, product to improve our presence in the market and to improve our profitability levels. This is why we can be more resilient in our business. I just wanted to say this message and to talk about the effects of our strategy in our results.
I will turn over to Rosângela, and now I'm going to talk about strategy again.
Good afternoon. Considering the points presented by John in terms of market and also our business strategy through the use of a multi-channel approach and different business units and special product mix. Of all of that, we've had lower levels in revenue, but we have maintained a gross margin at 39% in the first quarter of 2023. Gross margin also shows resilience in the sense that we've been trying to optimize costs and maximize manufacturing results to maintain the gross margins despite the inflation pressure that was present until the first quarter of 2022 vis-à-vis the first quarter of 2023. Going back to revenue. In the first quarter, we felt an impact related to exports for several reasons.
International markets were also experiencing high interest rates and some sales restrictions, but also we've been impacted by some provisional restrictions in the releases of exports in South America. That was applicable not just to Portobello, but to the market as a whole. That has led to improvements in the internal and external market in terms of revenue and gross margin vis-à-vis the rest of the market. Let me just make a comment, if you allow me. I think that it is worth talking and give you some background related to that. This shows the evolution of the market. Until the first half of last year, you see that we still had a very positive demand despite inflation pressures. We still had room in the market to transfer some of those costs to our clients.
During the pandemic, we were able to increase the margins to increase our sales and to make a good positioning of our product mix so that we could optimize our results. Therefore, we were able to provide record results quarter after quarter. In the second half of 2022, as we've mentioned before, inflation pressure remained. We could not transfer prices to the market as much, and our gross margins went back to historic levels, 43%, 45%. Those used to be above the levels we used to have. It takes some time in the market for us to get to a price leveling and also to determine the product mix. That was done along the fourth quarter and part of the first quarter of this year.
Portobello brand today in its various business and channels, although in the U.S., everything is different because it's practically a new business. Here in Brazil, in our channels, we see a new positioning. We are going to talk about the exhibit we participated in, which was very successful because of a new price positioning and also to the changes we've made in the product mix, whether increasing it or reducing it in some counts. As John mentioned, when we check revenue per segment, Portobello Shop has a very strong growth. We reached 22.5% growth in the first quarter of 2023 vis-à-vis the first quarter of 2022. This is the result of investments to keep following this growth trend in retail, acquiring our own stores, operating in the digital market, focus on service and customer satisfaction.
That has led to this 22.5% growth. Partially offset a drop in the other business revenues, Portobello, Pointer, and also Portobello America. It's worth mentioning that for Portobello America, we are implementing the new factory, so we expect to ramp up volumes in the second quarter, especially in the second half of this year when we start the operations of the new production oven. Our revenue structure shows that we've had a growth in our domestic market. The levels of revenue in the domestic market were aligned with the levels of last year, a little bit above of that 0.7%. The impact we've had in net revenue was to do with our foreign market. Its share as a total part of our revenue is much smaller because 80% of our revenue comes from our domestic market.
In exports, the basis for comparison that will be 2022 is when we were very strong in exporting to these markets, especially the markets in South America. There are two effects there. We've had a very strong impact in the first quarter. Those markets became weaker, as Rosângela mentioned. I'd also like to mention that Pointer, and we've been saying that for the past earnings calls, Pointer is positioned in a market of the northeastern part of the country, and also positioned in a segment that is hit the most, which is the multi-brand or resales, re-retail market. Because of that, Pointer has suffered. In the past quarter, it did as well. This is why Pointer has had results that are worse than the others.
As this market recovers in the Northeast, we expect that market to be favored by the structure and by the current politics situation. In terms of gross margin per segment, as John mentioned, over 2022, we're able to transfer some costs to our customers and reposition our margins. At this point, volume retraction has also an impact on the margins of all business lines. Portobello, for example, had a performance in the first quarter of relatively in line, the first quarter of 2023, vis-a-vis the first quarter of 2022. The Portobello unit performed 37.8%, which is a drop of 10 percentage points vis-a-vis the last year, the first quarter of 2022, while Portobello Shop has reached good results in line with our strategy, considering the expansion of our own stores and gains in productivity.
The gross margin is aligned with the one we had last year. In the case of Pointer, as John mentioned, because of the inflation pressure, especially in the region where Pointer stores are located, and also because of a reduced demand, we've had a 24 percentage point reduction in our gross margin. Portobello America, on the other hand, is aligned with the results we have in the first quarter of 2022. Now we are in the last stage of assembling equipment, and we expect to start operations soon in the factory, which will bring a positive impact on our results. In the case of Portobello and Pointer, we've also felt the effect of downtimes that we've had in the factory. We have had fewer downtimes than the average in the market. We've been working with idle levels ranging between 40%-50% in the past six months.
This is a very high level of idle time. It's not very healthy and puts a lot of pressure on our margins, not just because of the market competitiveness, but also because of the incurred costs for the downtimes. Again, we feel the effects of that, especially on the Pointer and Portobello lines of business. In terms of operational expenses, we've been working to contain expenses in our areas. With cap investments for priority projects such as retail and Portobello America. On the right-hand side, you can see the blocks indicating the evolution of expenses from the first quarter of 2022 until the first quarter of 2023. It is clear in this chart that this increment was focused on building this structure that is going to meet the demands of Portobello America now that the factory will be in operations, as well as the planned sales for that.
That also includes investments in Portobello Shop now that we have new stores, and we'll keep on investing in that business model. Other expenses had a decrease or just moved sideways. That has led to an EBITDA that was positive, but there was a drop vis-a-vis the same period of last year, both vis-a-vis the first quarter of 2022, and also when compared to the fourth quarter of 2022. Given these market challenges, the company is still presenting positive operational results. In this adverse scenario, we've been prioritizing strategic projects. We have been working on optimizing results in all other fronts, with the expectation of picking up growth in our EBITDA from now on. I'd also like to mention that it's important to take care in analyzing our figures. We should take into account the seasonal effect.
The first quarter is always the weakest in terms of margin and sales. Not just because of that, but mainly because of a combination of factors. This is why the first quarter is not a quarter whose results can be extrapolated. We should not use that as basis for forecast. Of course, the operational results relate to the scenarios in the market. As it was mentioned too, we have accelerated the expansion of Portobello America, but we haven't reaped the fruits of that factory yet because it hasn't started operations yet. It will start soon. There are different factors that put pressure on the results of our first quarter. Again, we should not use that as a prediction for future quarters. The net income that results from the operational results added to the largest financial expenses.
As we know, financial expenses are related to the cost of the debt, and we are experiencing high interest rates today. That has led to an adjusted and recurring net loss of BRL 17.7 million . Regarding working capital. We needed more working capital than in the last quarter. This was a trend vis-a-vis the first quarter of 2022. The main offender here is the steel inventories. Although we have been trying to optimize the portfolio of receivables and supplier management, in terms of investor inventories, we have lower demand. Even with the downtime in the ovens, we still have significant inventory levels above what we would expect to keep as normal levels. That has had an impact on cash conversion and more need of working capital. Investments have been made similarly.
They were focused on Portobello America factory to maintain the CapEx that we mentioned in previous calls, as well as on the expansion of our own stores. This is where most of the investments have been made. You see other points on the chart in the middle, such as the carryover of investments that started last year. It was just being delivered this year. Investments are mainly focused on the expansion of the factory that will start operating soon and on the expansion of our own store network that is providing very good results. Net debt. Our leverage is at a very healthy level, considering debt versus EBITDA. The net debt of 2.2x EBITDA. That was the result for the first quarter of 2023.
The duration of our debt is of about 3.8 years, 87% of our debt is in the long term and only 13% in the short term. That is very similar to what we've had in recent years.
I would like to comment on the effect of the American market in the fixed income credit or in the credit market as a whole. We've been working with operations with much longer duration. That's the plan we've had for some time for the disbursements in the first quarter, wanted to have a duration that was more similar and longer than the operations we've had. That has changed a lot. We've conducted good operations considering the market context in the first quarter, all of them of shorter duration. Now we have higher concentration of amortization in 2024.
That does not have much effect on the cost of the debt, but it has some effect on the schedule of amortization. Along this year, we will try to extend our current debt duration. I think that's very important and the market is improving. We expect to have a better situation in the second quarter for these operations. It's not on the slide, but we ended the first quarter with higher rates. Our cash was close to BRL 390 million because of these funds we've raised. Now we expect to have a more restricted credit market. Our strategy right now is to have more liquidity for the company to have a more robust cash, because we want to move on with our operations. We've been doing that, but without any financial restrictions.
Sometimes there are internal restrictions because we want to keep our investment planned. When we talk about guidance, we'll talk about that. We will maintain our priority investments.
On this slide, I would like to make a few comments when we compare the guidance that we disclosed in our last call and compare that with the actual results we've had. Let me start with revenue. The net revenue we expected will be aligned with the fourth quarter of 2022. The fourth quarter is usually weaker, we expected the first quarter of this year to be in line with that. It was a little bit lower than what we achieved in the first quarter of 2022, pretty much aligned with that guidance. In terms of expenses, we plan to maintain the gross margin at about 43%.
We expected that along 2023. We expected to have a higher recovery of the gross margin in the first quarter, we ended up the first quarter with a gross margin of 39.4%. In expenses and also including costs, we have been conducting a more stringent management of costs and expenses, our expenses still focus on our strategic priorities, Portobello America and Portobello Shops, namely, considering the network of our own stores. With these acquisitions, of course, we have additional expenses. In the other business, we've been able to reduce expenses. We will keep that line of management. We've also been reducing costs. We've been observing a reduction in prices of gas. That's an important reduction we've seen in the first quarter, we expect to see the same thing from now on.
Not just in terms of reduction of gas or other inputs, but we've also been able to reduce costs because of productivity effort. In terms of CapEx, we've focused on strategic products, and most of that have been done as such. As for cash flow, the management of the cash conversion cycle has become very difficult. As Rosângela has indicated, this is due to the level of inventories that we have now that the market is weaker. As for financial leveraging, we wanted to maintain above 2.5% of the EBITDA, and we are now at 2.2x . Let me tell you more about the strategic projects and give you an update. I can even go through that quickly because we've mentioned some of that before in this meeting.
Starting with Portobello America, we are days or weeks away from starting the production in that factory. It is ready, and we are just finishing tests so that we can start the first round of production that expects a stabilization phase, and only then we will go to the actual production levels we expect for that factory. The implementation is being very successful, and this is going to be one of the most modern and flexible factories in the U.S. That's an important step to the Group. It is the largest investment in the history of Portobello. We want to have a bigger production footprint, and that's going to happen now that we are moving to such a strong market as the one in the U.S. In the first month, we expect to go through a stabilization phase and also start building inventory.
As Rosângela mentioned, we will see the effect little by little in the first two or three months of operations. This is when I start to see that in our results, and that's going to change our P&L for Portobello America. Today, it still has features of investments because of the level of expenses or the bottom line results. In the fourth quarter, we are going to see a positive contribution of Portobello America. It's going to be significant and change the results of the group as a whole. Today, Portobello America has a negative impact on our EBITDA, but in a few quarters, it's going to have a very important positive contribution to the EBITDA and the results of the group. We feel very confident about this project.
We talked about the American market, what's also important to say that the positioning we have in the U.S. is different because of how the U.S. market works. 70% of the products the American market uses are imported. The local market has been gaining more competitiveness in the past years. Market oscillations in the demand of ceramic tiles, most of the times are absorbed by imports. If there is a lower demand, then import levels drop. That's what we've been witnessing in the past years. Local producers are very resilient. This is why we feel so confident about this business in the U.S., regardless of what happens in that market. That's a market that is now showing more positive results, by the way. You see pictures of the factory, very recent pictures, by the way.
This picture you see in the middle was taken a few weeks ago. It's even more advanced than that. The one in the bottom you see it's a little bit more recent because there's asphalt in the roads around it. Portobello Shop is a continuation of a project that we've been talking about in the last earnings calls. It's a transformational project. We are transforming the business, the culture, and Portobello Shop has had a great job, not just in its culture, but also has done a great job digitizing our business. These results come from the progress we've made, of the expansions we've made. We've opened two new stores and closed one. In total, we have one additional store. That's also true for our own stores. Through acquisitions of stores of the network and also through the opening of new stores.
On the right-hand side, you see the performance of the business unit. Those are the current results. In the bottom chart, you see the performance of our own stores, the sellout performance. We have 24 stores that we own. There was a 57% increase in the sales vis-à-vis the first quarter of 2022. Part of that because of the acquisitions we've made, and you see that it's becoming more relevant in the business as a whole. We've also had advances in ESG. We mentioned that in our last call, but it's important to reinforce some points. We published our sustainability report in March. This is an important management tool internally also to give more visibility to the market, to show you what we've been doing in terms of sustainability.
We mentioned in a previous meeting that the project done together with Enel, not just to purchase energy, but also participating in the project of self-production of wind energy, that as of next year is going to provide to meet 50% of our electrical power needs in our factories. We opened a new store in Curitiba. It has the platinum certification from LEED. That's an important step in terms of sustainability, focused more on retail. Here are other highlights: the Sururu project, a project that we implement close to the Pointer factory. This is a region with a lot of social problems. The population collects a small shell called sururu, and it's like a seed and it's a shell. They sell the meat that is inside, and they will usually throw away the hull.
That creates not only a social problem, but also an environmental problem, because there was no proper disposal of those hulls. We are now purchasing those hulls from that community. That also generates income to them. In that local community, we've been using that hull to produce products that have been developed with designers, developed at Portobello, and we are selling those products using our Portobello Shop network. The gray product you see in the picture is produced by that project. It's a very beautiful project with a great potential of social impact. We've also mentioned about some advances we've made in governance. I've mentioned about the new board of directors. In the last assembly meeting, we had new members of the board, and Mauro Vale is now part of the board, as well as Marcio Lobo and Maria Laura.
We also created two new committees. That was an important evolution in our governance structure. We now have a Design Committee and a Internationalization Committee. Actually, the Internationalization Committee already existed but worked internally, and now it is really a committee of the board. Focus more our internationalization, not just through Portobello America, but also through the exports related to our other business lines. The Design Committee will also focus on this attribute which is so vital to us: product design. It will be a committee that will be applicable to our business lines. As I mentioned, we have the sustainability seal. Now that we have met the sustainable goals of the UN, we have selected the most important ones to the group, and we got the signatory seal, a very important acknowledgement of all the efforts we've been making.
Try to rush because I think that I took too long in my explanation. I shouldn't forget to mention about our participation at Expo Revestir. That was a highlight in this exhibit. We were awarded with a big booth of 1,400 square meters using sustainability concepts, and 100% of that structure was from reused materials. We launched the Authentic collection. We also made a change to our product mix. That's a very important topic to us. We have been very successful, and we've also set new sales records during the exhibit. you see some collabs that were established with – t hose are important innovation pathways that we can take. That is part of our product development strategy. Finally, let's talk about perspectives for 2023. Again, it is important to stress out what I mentioned in the beginning.
From the strategic perspective, we are very pleased and confident with our choices. We understand that they are going to help us go through this adverse scenario in the market. It will make more difference in our results in the future. From the market perspective, in our understanding, I think that we are going through for what would be hitting rock bottom. We understand in our business that we go through cycles. During the pandemic, we were in a peak. Now we are going through a valley. Now that we're at levels even lower than what we had in 2019, we don't expect the market to get any worse in the next quarters because the base of 2022 will be a lower base of reference from now on. We expect to witness recovery in this market.
That recovery depends on the economy, depends on how fast interest rates are going to be reduced and how much they're going to be reduced. As a consequence. The confidence of our consumers in making this type of investments again. We expect that in the second half of the year, the market is going to be more positive. Our strategy will have its effects not only for a premium shop segments, but also in the engineering channel. We've already mentioned that Portobello America factory will start production in the second quarter. That will have positive impacts on our results. We've also mentioned the acquisitions of stores in 2022. Those gains are still being captured. The growth we expect for 2023 will be very similar to the growth we've seen in 2022 vis-a-vis 2021.
Last year we grew at about 15% rate, that's what we expect for 2023 once all the effects from different units are captured. In terms of costs, again, we will see a significant impact now in terms of costs in our business in the U.S. The factory will start to operate internally. We will maintain discipline in the management of costs and expenses, very much aligned with what we've done in the first quarter. The EBITDA margin in 2023 will probably be slightly lower than the one for 2022. Unfortunately, in the first quarter we've had a weaker quarter, but we expect to see improvements along this year. Still, at the end of the year, we believe the levels in the EBITDA margin will be a little bit lower than in 2022. CapEx investments will be maintained.
We expect to make BRL 380 million investments focused on our strategic priorities. Similarly to what we've been doing for expenses, as our results unfold during the year, we will have some space to reduce investments. Since they are based on strategic priorities that are ongoing, we don't expect significant changes in our investments. That's important when we start predicting results for 2024 and 2025, because they depend on the investments that we'll be making in 2023. Finally, from the financial perspective, we ended up the year with a leverage of 2.2. For the next quarters, the second and the third, we expect the leverage levels to go up, getting close to 2.5x closer to our policy. It's not the level itself that is so important.
Once having good quarter results, as we expect for the second and the third quarters, probably we'll see this leverage levels will drop again to levels close to 2.2. Again, we are very disciplined in the financial management because of the challenge we've seen in maintaining inventory. We've been managing that through sales increase initiatives and also through the downtimes that we've mentioned. That's what we had to present today. Maybe we even spoke a little bit longer than usual. I would like to open the Q&A session to those who are following this meeting. Thank you.
We will begin the Q&A session for investors and analysts. If you wish to ask a question by audio, please press the Raise Your Hand button. If your question is answered, you may exit the queue by clicking the Lower Your Hand button.
Questions can also be asked in writing in the Q&A option. Our first question comes from Tito Labarta from Liz Capital. He has two questions. Regarding the impacts of the gas price in this quarter, have they already been captured in the effects of the lowest price? Has that helped in gross margin? What are the perspectives of a new review of the gas prices in the mid of 2023? His second question: regarding your perspectives for 2023, could you please elaborate on the conciliation between the perspective of EBITDA margin maintenance vis-a-vis 2022 with the results of the past two quarters? Do you have any plans to increase the control of expenses if necessary? Finally, he has a third question: the sales performance of Portobello America in this quarter was lower because of the expectations you had for this business unit.
Any non-recurring effect that can explain a drop in sales in the quarter?
Hello, Tito. Thank you for your questions. Let me see if I can answer all of them, and if I forget anything, just let me know. Let me start with the one related to gas prices. As I've mentioned, we felt very strong pressures because of gas price increases last year. In this first quarter, we already had a significant reduction in the gas prices. 11% reduction, at least in the state of Santa Catarina. The effects on our results depend on the inventory turnover. Since the inventory levels were higher, the effects of the lower gas prices were captured in the first quarter, but not fully. We've seen some effect of that, but not completely in the first quarter.
The effect of the gas price reductions will also be felt in the second quarter because of that. In the second half of the year, and of course, that depends on how commodity prices will be at the end of the first quarter, the first half of the year. We expect the gas prices to be reduced once again in the second half of the year. That is applicable to Brazil, of course. Regarding the EBITDA margin, I'm not sure whether I understood your question. The EBITDA margin today, maybe you can infer that through the gross margins that we had in the business. There are some factors to be considered, like gross margins. In gross margins, we've already felt the effect of the downtime of the factories.
That's an important consequence in our results, especially at Pointer. Expenses with the strategic project, especially Portobello America, not as much Portobello Shop, because the expenses of the own stores will bring results automatically. Portobello America is different because we make significant OpEx investments there that involve structure systems. Those are expenses we are having right now. We are incurring full expenses to build the factory in the U.S., but of course, we're not getting the results of that yet because the factory is not operational yet. That is going to make a difference in the future. This is why we lose margin in some of our business in some quarters. There is also the seasonal effect. The first quarter is always the weakest quarter in sales and in margin, and also even more in the bottom line results because of gross expenses.
We expect to see some recovery in the margins, and we expect to end the year with an EBITDA margin a little bit lower than what we achieved at the end of 2022, but with growth in revenue by 15%. What was the other question?
You talked about sales performance of Portobello America. In simple terms, there are two segments to Portobello America. Sales and distribution.
We expected to have a faster ramp-up process. We were frustrated in both channels. Especially in home center. The home center channel, as in Brazil, in the U.S., the home center channel has suffered a reduction in consumption and also high inventory levels. That effect has already subsided, coming back to normal levels, much higher orders at the end of the first quarter, and now we are getting the ramp-up in distribution as well.
We expect the second quarter to perform much better than the first one. Of course, that's important for the beginning of operations in the factory. We are not so concerned right now with the sales of what is being produced in the factory because we have enough levels to be produced. Of course, we want to sell more than the oven capacity, at least now in this first stage of the project. Still have a significant challenge in sales ramp up. That's something we've been witnessing we expect that over the second quarter, maybe even along the third quarter.
Our next question comes from Mauro Herzan from RSI. He sent three questions. The first one: regarding strategic projects, do you still see Pointer as a strategic project despite the poor results it has shown quarter-over-quarter?
It's important to remember that Pointer was created as a strategic decision to democratize our brands at Portobello. Portobello is a very premium positioning. We have been very successful in that segment, in the positioning of the Portobello brand, especially through Portobello Shop and increasingly premium positioning. The market tier right below Portobello is also very significant, especially in terms of scale. The fact that we are also positioning ourselves in areas that will allow us pathways for growth is significant to us. This is what Pointer represents to us. It appreciates quality. It's a market appreciates quality, design. It has higher scale. There's a lot of room for growth, especially in the Northeast area. Right now, the scenario is unfavorable for the Pointer positioning, both in terms of geographic positioning and also marketing positioning and channel diversification.
We've been working a lot on channel diversification. I think that's a very important pathway. We've also been discussing about strategic alternatives to gain scale at Pointer. Still plays a very important strategic role in the group, but unfortunately, it's going through rough times because of the market conditions.
Mauro Herzan's next question is, it's similar to strategic projects. Exports to South America, especially Argentina, will that still be part of our strategy, even though this market is increasingly more complicated?
Specifically in Argentina, thank you for your question. That market specifically is going through an economic scenario that has been impacted and is also something historical, something we've been witnessing for decades. They have very stringent controls of imports and also control of the foreign exchange market. It's not the first time that that happens.
Historically, even in these scenarios, we've always kept our position in Argentina. We have great clients there. Argentina is a market that really appreciates the positioning of our Portobello product mix. This is why we see Argentina and the other markets in South America as the strategic markets. What's not been very helpful is risk diversification. Oftentimes, these problems happen when these countries are going through difficulties. It's the same in the U.S. or in Europe and in Middle East, Africa and Asia. Central America. We've expanded in all these areas. These expansion has been made in a more structured team. Now we have better structured trading teams, and that has been an important move for us. South America, since it is so geographically close, is a market where we should be more competitive.
This is why we'll keep the strategic position. We do not intend to reduce our efforts there.
Mr. Herzan's third question is: last year, you closed a share repurchase process with the average price 2x superior to the current share value. Portobello has a market value today of $160 million, seems distorted. How do you see an opening for a new repurchase of shares?
Yes, it's $160 million. You've written billion in your question, Mauro. We haven't reached that yet. We have made some repurchase processes recently. Today the program is not open.
This is a decision of the shareholders and of the board. Today we do not have an open repurchase program, and that's not up for debate at this point.
If you want to ask a question, raise the press the Raise Your Hand button or send your question using the Q&A button. If your question is answered, you can exit the queue by clicking on Lower Your Hand button. Next question is from Tiago Sossai. I would like to know if you already have information to share with us about the sales of what is being produced in the new factory of the U.S. Are you already selling what is going to be produced?
Thank you for your question, Tiago. It's a good question. That's a very important commercial plan. We've been producing in Brazil and also through outsourcing in other partners in Brazil and the U.S.
We've been producing some products that will be later manufactured on plant. We are selling those already. We've already sold and delivered those products to our customers, but manufacturing different sites. We already have orders made for the products that will actually be produced at our factory. Both from the sales perspective, the physical sales perspective, as in terms of future orders, we have moved forward significantly.
Our next question comes from Gustavo Cardoso. Do you intend to raise more funds and increase your debt to continue making investments in the factory and extending the debt profile you currently have?
Thank you for your question, Gustavo. I would just like to add something to the question asked by Tiago, the previous question. That's important for the Portobello America project. We forgot to mention that. Actually, don't forget to mention.
Actually, we didn't mention it because this is an information related to the second quarter. We produced the Coverings. This is one of the largest exhibits in the U.S., one of the largest in the world for Coverings in general, including ceramic tiles. We have already planned to have a stand with a local producer, and we'll present launches. All of that will be produced at our factory. The participation really exceeded our expectations, the participation of our clients there. We took orders for all launches we've made in that exhibit. That will help you give you some perspective about the potential we have for our project in the U.S. Answering Gustavo's question about debt. Our plan for this year was to have raised more funds that we've had so far, so higher levels of debt, and also with longer duration.
Usually, we've raised funds for two to three years, very, with higher liquidity. As soon as we see a fixed income capital market, even through banks, that shows more liquidity, that provides more long-term credit lines, we will probably take more funds, and we're probably going to expand the profile of the debt. We don't believe this is urgent. We don't expect to do this over this year. When we consider 2024, either because of the investments we expect for that year or in continuity to what we've been making this year, as you could see, because of the investments in the U.S. factory, and also because of the amortization schedule we have with a higher level amortization for 2024, we will need to raise more funds in the market. The timing will depend on what is being offered by the financial market.
In the fourth quarter, the latest, we're probably going to raise more funds.
Next question comes from Israel Borges. What are the perspectives for the new factory in the U.S., considering the adverse moment that the real estate market in the U.S. is going through and also their high interest rates in the U.S.?
Thank you for your question, Israel. It's important to understand the context of the American market. We've been asked that question oftentimes. When you consider the global market, not just the market in the U.S., everyone has been affected by high interest rates, and that has an adverse impact on the real estate market.
In the U.S. market, 70% of the consumption of ceramic tiles is imported, 30% of local producers, they are competitive in terms of costs, and also because they have a differentiator such as a local design level of service and their ability to provide better services to their distributors, retailers in the U.S. All these conditions make these oscillations that we observe in the consumption of ceramic tiles to be absorbed by imports or by drop in imports in the U.S. for that market. We are seeing the opposite of that. As the capital costs increase, inventory costs, because inventory costs for imports is much higher than reselling products from local manufacturers, that will end up increasing the prices of imported products. We see the supply chain in the U.S. preferring to get their products from local producers.
Let me remind you that if you want to ask a question by audio, please press the Raise Your Hand button, or send your question in writing using the Q&A button.
Our next question will be asked by Tito Avila. Your microphone is open, sir. We cannot hear you, Tito. I'm not sure whether he was able to open his microphone. We cannot hear you, Tito. Well, let's leave Tito's question to the end of the call. Our next question will be asked by Francisco Cole. You can open your microphone, sir.
Good afternoon. Can you hear me?
Y es, we can.
Thank you for taking my question. I have a question about Portobello Shop. That was an outlier in the results of this quarter. You've been increasing the number of your own stores in comparison to the number of franchisees.
Do you believe that that would generate a competition between your own stores and the franchisees? How do you deal with that increase in your own stores? Also the fact that the results were also so positive for you in this segment.
Well, let me start by saying that we truly believe in this model where we can combine this model with our own stores and franchisee stores. It's not part of our strategy to expand our network of own stores much more. That was a very important movement in terms of transformation in retail. We send to retail in the stores. This is where we first run our evolution exercises. In our own stores, we experiment, and then we can expand something to other stores. In terms of competition, I don't see that happening. This is a well-organized network. It has a centralized management system.
I think this is the major benefit of having a single brand network with centralized management through the franchisor. Our stores that are our own stores already existed in the past. The only competition that would happen between stores already happened. It's not the fact that they are our own stores. It would be related to how we organize ourselves, even geographically speaking. How we manage our client portfolio. It is independent of the presence of our own stores. I don't know if your question was related to that, we do not see this competition effect with our own stores.
Yes, you answered my question. Thank you.
The question and answer session is now closed. We would like to turn over to Mr. Suzuki, who will make the company's closing remarks.
I would like to thank you for your attendance.
I think we had an opportunity to cover the most important points during this presentation. We went even a little bit longer than expected in this meeting, and I apologize for that. I would like to thank you for your participation. Let's meet again when we present the earnings results for the second quarter. Thank you.
Portobello's video conference is now concluded. We thank you for your participation and wish you a good day.