Good afternoon, everyone, and thank you for standing by. Welcome to the earnings conference call to discuss the results of the first quarter of 2023 of Viveo. For those who need simultaneous translation, we have this tool available on the platform. To access, just click on the interpretation button through the globe icon at the bottom of the screen and choose your preferred language, Portuguese or English. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking on mute original audio. We inform you that this video conference is being recorded, and it will be made available on the company's IR website, www.viveo.com.br/ri, where the complete material of our earnings release is available. During the company's presentation, all participants will be in listen-only mode with their microphone disabled. Then we will start the Q&A session.
To ask a question, click on Q&A icon at the bottom of the screen and write down the company so that you can get it in line. When being announced, a request to activate your microphone will appear on the screen, and then you must unmute your microphone to ask your question. We recommend that the question be asked all at once. We point out that the information contained in this presentation and any forward-looking statements made during this conference related to business projections and operational and financial goals of Viveo constitute beliefs and assumptions of the company's management, as well as information currently available to the company. Forward-looking statements are no guarantee of performance, for they involve risks, uncertainties, and assumptions, and therefore depend on circumstances that may or may not occur.
Investors should understand that general economic conditions, market conditions, and other operating factors could affect Viveo's future results and could lead to results that differ materially from those expressed in such forward-looking statements. Today with us, we have Mr. Leonardo Byrro, Chief Executive Officer; André Pacheco, VP of Strategy and New Businesses; Guilherme Goulart, Chief Financial Officer; Flavia Carvalho, Director of Investor Relations and M&A; Thiago Liska, Director of Diagnostics and Vaccines; Vilson Schvartzman, Commercial VP of Distribution and Logistics Operation; Flavio Leal, Director of B2B Services; and Renan Hervelha, Retail Director. I would now like to give the floor to Mr. Leonardo Byrro, Chief Executive Officer, who will start the presentation. Mr. Byrro, you may proceed.
Good afternoon, everyone. Thank you very much for attending our call to discuss the results of the third quarter of 2023. The team is here to take your question in the Q&A session. You can already ask your questions. We are going to go through the material, and then we will discuss some points with you. First, I would like to talk about the start of 2023. Our focus was on execution in the beginning of the year, and here we have the priorities for the year.
The first quarter of the year was about this. These are the points we have been working on since the beginning of the year. One is the simplification of our activities. We can see the number of circles decreasing. We simplified the number of brands, and especially in hospitals and clinics. I will make more comments about it. And one of the focus of the first quarter. The second was evolution of our logistics structure.
We are going to talk about the investment so that we can be more ready to support our accelerated growth. The other is integration of system. We have a very robust agenda integrating our system for incorporations. There are many incorporations to be made this year, bringing operating simplification to our business and gain when we capture all the premiums that we have in the balance sheet. Then adjustment to our operations, considering the tax changes, the FAO, some agreements, and Convênio ICMS 62/23. Therefore, with those fiscal changes, we had to make different changes with the origin and destinations. This is something that we executed very well in this quarter. Now moving on to the next slide. This is the repositioning of our brands in distribution to hospital and clinics.
Remember, we made a number of acquisitions, both in materials and we used the brand of BFS and Profarma Specialty. We put together all those brands, put them together into a single brand, and we discussed which would be the brand that we should use. Considering all the credibility, we made an evolution of Mafra brand, and we launched it to the market. This is the brand we are going to present ourselves in the hospital and clinics channels, and with all the portfolio of products from disposable materials, reference drugs, generics, nutrition. Everything will be under this brand that we have today.
We created a sub-brand, a variation of the brand, which is going to be specific for specialties that we used to call Cirúrgica Mafra. What came from PFS and Mafra stores that were acquired, we call them all Mafra Especialidades or Mafra Specialties, where we are going to provide services to the final patient and also to healthcare professionals. This will include also deliveries. Moving on to the next slide. This is the inauguration of the new distribution centers. We have a new one in Nova Santa Rita with an investment of BRL 12 million, and we did a very beautiful inauguration ceremony. We did not have a distribution center of this size, and this was something that was demanded in order to provide better service.
There are many projects in the service we use so that we can use the space, so that we can gain more share, consider our clients, improve our service level, and improve the working capital as well, which is one of the big challenges of the sector. In Pernambuco, we were already present, different from the Santa Rita, but we made another big investment, BRL 10 million, with a new structure, putting together some centers that we had. We had the purpose of increasing our service level. There are many other actions. The investments will amount to BRL 40 million in modernization, evolution, and expansion of our distribution centers in order to provide support to our future growth. In terms of technology, it's another essential point for this year. In our integration agenda, we are going to have two big fronts of the systemic evolution.
What you see on the screen is the WMS, which is the system that controls all our distribution centers. Up to the beginning of next year, we are going to have all distribution centers integrated in a single platform, and it's going to make a whole lot of difference, because as we made the acquisitions, we had different ways of working with the CDs, DCs, and this would affect the management. The other change is going to be the system of sales. We decided Salesforce to be our official platform for all companies. Today, we have different platforms used for the business, and now we are preparing in order to implement this integration that is likely to happen in the second half, and we are going to be ready for next year. The third is the ERP system. We have TOTVS Retails inside our business.
There are other companies that we purchased that didn't have an implemented system, and now we also have the SAP system. But up to the end of the year, we are going to make a headway and integrate all our system, standardizing the process up to the beginning of next year. Okay. Another important highlight for the year that I would like to start with is services. We had a very significant growth, and we are going to see this when I go over the numbers, but I would like to mention how important this is for the important moment we're living in the sector. This is one of the biggest challenges that we have, or opportunities that we have to help our partners so that we can find solutions that can be structurally better for the working capital. We have a value proposition which is very relevant.
We have important cases in the company where we can bring in 20% or 30% of savings for many of the clients by optimizing the capital employed, meaning that the inventory will not be stocked, and it can be used for handling or any procedure. And we're going to deliver this nearly ready to be consumed on the day that the product's going to be used or very close to the date to be used instead of leaving the inventory without movement. The level of inventory that we have in the chain, if you look at the inventories of many service providers, we're talking about 50 days in inventory. When you look at our inventory, specifically when you're talking about distribution, it's another 42 days of inventory. Nearly 90 days in inventory when you see the whole chain. This is where we see opportunities for optimization.
That's why we were very enthusiastic with the number of leads and also in the service channel opportunities, and some of them have already been implemented in PSE or handlers, but there are many more initiatives to come. This was one of the highlights for the first quarter. Now moving on to the next slide, I would like to talk about our synergies.
Together with the five points that I mentioned, the result is our capacity to capture synergies along the year because systems integration, incorporations of corporations. And this is basic for us to capture all the synergies that we see out there. We saw BRL 25 million in the three first months of the year, and we have a target of BRL 67, and we can see this curve along the year, and we hope that this capture is going to happen in the second half of the year.
We started at a very strong pace considering what we did in the fourth quarter of last year, and we can see the result now. We are very confident that we are going to deliver this target along the year. Now I'm going to move on to the financial results, and then I'm going to talk about each BU and then start the Q&A. We have a record revenue of 47% higher than the first quarter. Double-digit growth of nearly 12% for the quarter, and we're going to continue going after this objective along the year. Our net profit was 47% in comparison to the previous year. You saw there was a little drop of margin in comparison to the previous year, especially impacted by the PFS and something related to mix related to the first quarter.
We see evolution along the year and our expectation, our objective, our target, is to evolve the margin along the year. Okay? And a record EBITDA of BRL 233 million, 33% growth and a margin of 8% in comparison to the previous year. Our net adjusted profit was BRL 60 million, a drop of nearly 47% in comparison to the previous year, driven by the financial expense of the company, as we have mentioned in the fourth quarter. And a cash cycle of 55 days in the first quarter of 2023. You must recall that in the last call we closed the cash cycle much lower than what we had as history of the company, but we had some adjustments of inventory in addition to the tax changes and a higher consumption by our clients at the end of last year.
We can see this affecting the cash cycle, which was higher than last year. This is a natural dynamic for our business, so it's typical to have this cash consumption in this period. There's nothing different from our expectations and we are going to make the necessary adjustments along the year according to the curve that we saw in the previous year. And our annualized ROIC was 21.5%. Moving on to the next one. Hospital and clinics. The main highlights, we had a growth of 9.6%, organic growth. We would have grown 5% more if we didn't have losses of internal sales. This was not related to market demand. Our inventory adjustments and the recomposition of inventory, especially in January, February, made us to have revenue below the estimates. This was about BRL 100 million. March was very different though.
We have a record month of sales and from now on we believe that this is going to be the pace of the year. We have a delta of organic growth driven by recomposition of inventories and inventory levels. In March, we had something focused on oncologic. And the public market, we continue with the same financial discipline to ensure that we are going to gain new agreements and we are going to execute them well. And we had a growth of ROIC in relation to the previous year. We expect a good performance along the year and along the other years. We have bigger challenge in the beginning of the year, also because of the change in government administration. Another highlight is the growth in delivery of the specialty, especially dermatology, where we sell botulinum toxins.
This is a market that grows a lot, 30%, 40% a year depending on the product, and we managed to grow 46% in the first quarter, and we can see potential to continue growing at very significant rates along the year. I believe this was a very good quarter and all the tax changes related to Convênio ICMS 62/23, and these are the most affected channels considering the changes. In spite of all this, we managed to deliver a very good quarter. We were a bit frustrated with the sales that we lost in January and February, but we were very enthusiastic about the results of March. Moving on to the next one, laboratories and vaccines. We have 21.6% in the total growth and 5.7% when we exclude the COVID effect of January, February last year, that had some impact.
We have two very different dynamics considering laboratories and vaccines. Vaccines performed well with growth this year, especially with the launch of new vaccines. We have herpes zoster, a new vaccine of HPV that came into play in the beginning of the year. The good news is that we are going to have other potentials. As to laboratory, we really felt some more difficulties in increasing volume. We had a cost pass-through in January, February. Part is going to be captured in the second quarter because this was a movement that we made at the end of February. But in terms of volume, whenever we have a more pressurized economic scenario, we see a level of migration of volumes because basically it's a trade-off between cost, performance, and agility, and in a more stressed scenario, they prefer to go to the support. This is cyclic.
However, we face those difficulties, especially in two regions, Rio de Janeiro and Brasília, where we have more public, higher presence of public. We saw that people had a more slow reaction, and this is something that's going to normalize along the year, but we saw this impact. We see that this growth of 5.7% is not something that is likely to continue along the year. We also have other important initiatives to increase volume, and we are very enthusiastic for them to materialize as of the second quarter, so that we can resume the acceleration rate, double digit. This is our expectation. Another important is the channel to retail. We grew organically 19.3% in comparison to the previous year. You probably remember the dynamics that we implemented last year, which was a very important trade-off of margin and volume.
We have always prioritized to pass through the impact of costs. We had lots of increases of prices so that we could reach the level of margin that we wanted. But that impacted our volume in the short term and also our growth in this channel. Here we can see that this strategy was very successful because we can grow, we can grow organically, nearly 20% at the level of margin that we wanted to have. We saw that at the end of the year, many of the competitors also had some price pass-through, and that gave us the opportunity to gain volume. We gained market share in nearly all categories where we operate, and we're growing a lot in opening new clients in new channels.
Pharma had some growth and also online channels, supermarket channels, specialized stores, and historically, we did not have a lot of presence in those. Lastly, the launch of our orthosis that we did not have. It is a very important item in this channel, which is important to sell not only in pharmacies and drugstores, but also in specialized stores. We are very enthusiastic about this line. This is a very positive highlight for the quarter. Going back, growing double digit with margin in retail. Lastly, services. As I mentioned in the beginning, we grew 33% organically. It was the first quarter where we had all the service companies already in our management because most of handlers, we closed in the fourth quarter of last year.
This is the first time we had all the companies inside the company showing a great performance with 29% of Healthlog, new contracts, management of inventory. This has to do with the dynamics for the working capital and the need for the sector to have solutions so that we can provide the structural support, increase in the revenue, especially in the segment of chemotherapy. This is the segment that grew the most, and we can see that this is a growing trend. Services already represents 9% of our revenue. Our purpose was to reach 10% of revenue, and we can see now a very balanced revenue considering the three channels. Laboratory and vaccines nearly with the same share considering the total sales of the company. This is something that we were after a long time.
Services is also one of the most important treatments for us, and we are going to have recurring quarters with all the companies operating as one to help us grow. On the next slide, gross profit, as I mentioned before, growth of 45% in the year, a drop of 0.3, especially due to the BFS acquisition that started in the second quarter of last year, causing a lot of impact. The other impact was related to the tax change and tax reform, and those tax adjustments do not happen overnight, so there was some impact on this quarter. For the second quarter, we have agreements where we had prices already agreed upon, and we had defined the price. There is a price adjustment after the second quarter, and this is when most agreements would mature. But we managed to do what we were willing to.
We were aware that we had this challenge for the first quarter, and it was in line with what we expected. This is what I want to make clear. The same is applicable to our EBITDA margin. There is a little drop in comparison to the same quarter of the previous year, in spite of the 33% of growth. We see the reflects of capture of synergies, but we have other captures to be made along the year and dilutions that are going to happen considering the other synergies that we are still to bring on board. Our adjusted net profit was BRL 60 million versus the BRL 114 million of last year, and we can see the growth of our net financial expenses that reached BRL 125 million.
This delta is the one responsible for lower adjusted net profit, and this is something we are going to work on in order to have this mitigated across the year and improve our net profit. We have been working in order to reduce our debt cost. We have been reducing the debt spread, but obviously, even with the reduction of the spread, the delta in terms of interest rates would impact our results. This is something that we are also going to do along the year, is to look at premiums as we incorporated the companies. Our gross debt did not change nearly. Our net debt was very similar with what we saw in the end of last year, a little bit lower, and the cash burn was a bit higher because of the working capital issue that I mentioned.
Therefore, we have to recompose this along the first quarter. Our amortization schedule is very extended, and we are going to manage to reduce our debt cost along the time. In relation to the M&As that we still have to pay, it is important to mention that all the debt we had as earn-outs, we practically paid them all. In April and May, we still had something to be paid, but all the remaining M&As to be paid in the future, they are in provisions for contingencies. Our ROIC, as I mentioned, was 21.5%, and considering the cash cycle, I would like to mention that we managed in inventories. We closed in line. When we consider the number of inventories that we had last year, we made an important recomposition so that we would not lose any sales in January and February.
Our accounts receivable had a similar movement. We can see that this is in line in comparison to the previous quarter. Accounts payable that was affected by this delta. Considering our quarter-on-quarter, most came from accounts payable. This is something that is going to be adjusted along the time, and also when we make adjustments to the inventories. This is all based on the conversations we have with the suppliers so that we can make changes to the deadlines of payment. The working capital of the sector is changing, and there is something very advice from our service providers. We have got important negotiations. With this, I end our call of results, and we are going to open the Q&A session, and we are available to take your questions. Thank you.
Now we are going to start the session of question and answers. We would like to remind you that if you wish to ask a question, you must click on Q&A at the bottom of your screen and write your question. When announced, a request to activate your microphone will appear on screen, and then you must activate your microphone to ask a question. Let us move on to our first question from Gustavo Miele, sell-side analyst with Goldman Sachs. Gustavo, we will open your audio so that you can ask your question. You may proceed, sir.
Good afternoon, Leo. Good morning, all officers. I would like to ask three questions, please. First is talking about the organic growth, especially considering this context. What is the main strategy for organic growth in terms of volume for 2023? Are you considering prospecting new clients?
Do you see this gap to be addressed along the year, or will the priority be something more in gaining more share of wallet, which has always been important for you since the IPO? I would like to know how the negotiations are developing so that you can provide a more complete assortment of products and services to the clients you currently have. This is my first question, and the second question is more objective. I would like to understand how much of this cash burn that we saw in the first quarter comes from this dynamics, this seasonable, or is it a natural stress of the chain in the inventories? When we compare with last year, we saw that the cash burn was lower when we look the two years put together. If you could separate the 2 points, it would help us a lot.
And the last question, if you allow me, I would like to talk about Healthlog, which was a very important highlight for the quarter. You mentioned some partnerships with handlers, which has been something very important for the company. How the economics of the new partnerships of Healthlog would compare to the current partnerships that you have with Healthlog? Could we think about margin expansion in the segment of service because of this? If you could answer those three questions, I would be grateful.
Thank you very much for the questions. I'm going to start, and the team will contribute if they wish. As to organic growth, without a doubt, our purpose is to gain share with the clients we already have. Disposable products is an agenda for growth. Nutrition is also an agenda that we started with a dedicated team, and we're going to see a growth along the year in a cross-sell with drugs along the year as well. In addition to renewal of agreements and also bundling of our offer, especially to the segment of private hospitals.
Share of wallet would be to integrate evermore all the teams so that they can work together. The public dynamic is different. We had some growth. We have everything it takes in order to grow along the year. As to laboratories, we understand there is still room to gain clients along the year, so we have a strategy developed for that purpose, and we have had some conversations so that we can bring in the wallet concept to the laboratory world.
We have made some talks with suppliers, and we are going to have more capacity to work directly to major clients and laboratories, and we can see that we have opportunities with some relevant products. We want to have the sales made via wallet. This can be important in this channel. In retail, it's especially important in terms of number of clients in the channels that I mentioned. As for pharma, maybe less, because our presence is already very relevant. We can ensure that we have the mix in the same way when we look at specialized channels for market and digital. We understand that we're creating a relevant demand, and we're going to open new clients this year. New clients are going to come on board. There are some variations considering each business unit.
I hope it is clear for you. In relation to cash burn, there are two points I would like to discuss, the seasonal and the inventory of the chain. The seasonal is part of our business. At the end of the last year, beginning of the year and pre-CMED, you have this increase of the fourth quarter in relation to the first quarter because of CMED's migration and the higher inventory levels. This is a typical normal season. What happened, our cycle was very low in the fourth quarter. If you look, we have a size of company, and we have the introduction of PFS in comparison to the first quarter of last year that operates with this seasonality, and we did not have this.
This seasonality has a burden, which is higher because it is the first quarter where we had PFS operating at all, and we had this variation. That explains the seasonality. As to the chain, we saw that the inventory of the main players and states, which are those that we can make all the accounts, we can see that they increased a lot from the fourth quarter to the first quarter of this year, and it had an impact on the sales so that we have a higher inventory levels in those clients that we saw in the previous year. This is a component that we observed, but as of March, this is probably going to get normalized, and we are going to see how the results disclosures are going to happen. We see those dynamics of inventories as the fourth quarter ended.
That explains a little of the structure in terms of how much the relevant changes have made in the economics in terms of margins, because I understand this was the focus of a question in the Healthlog agreements and logistics agreements. We have established partnerships with the same levels of margins and pricing, so there is no expectations of improvement of those margins and no deterioration as well because we understand that our value proposition is competitive, bringing saving to our clients. When we look at the handlers' dynamics, we see a difference between the types of services that we provide, enteral nutrition, and they have different margins. As we grow in oncology, it has a higher margin, but that does not mean that the margin is improving or deteriorating.
As we grow more or less in those two business, we are going to see a difference of mix in this specific channel. This is something more relevant considering this BSO services. It has some way changing the margins along the quarters, but this is more related to the mix effect than reduction.
Very clear, Leo. Thank you so much.
Our next question comes from Felipe Mansur, sell-side analyst with Itaú BBA. Felipe, we are going to open your line so that you can ask your question. You may proceed, sir.
Good afternoon, everyone. Thank you very much for the presentation. I have two questions on my side. First thing is related to synergies. We noticed that the company was able to capture nearly 40% of those synergies that were promised for those. That was promised for the half of the year. You said something in the presentation, but what are additional opportunities that you see in terms of synergy and how the captures are going to be distributed in the next quarters? The second question is more direct. In the release, you said the dynamics of January and February was a bit more challenging. In March, you had a record of sales. How do you see April? What are your expectations in terms of demand for the next months as well?
Thank you, Felipe Mansur, for attending the call and for the questions. Synergies. Our synergies are broken down, a little bit of cost, a little bit of expenses. I think expenses was the first homework we did, caused the highest impact on our synergies. Cost takes a bit longer, but we do not see much beyond. We do not see anything different from what we had mapped out.
We are very loyal in executing what we had promised. Of course, if there are different opportunities and if we need to be more aggressive, we are going to do so along the year. But expectation is to reach this BRL 67 million and see this total annualized effect by the end of the year and not now. We do not have many more details than what we are saying, nothing very different from what we had mapped out. January, February, as I mentioned, we had the component of higher inventory levels in the chain, and there was a relevant effect that we did not have enough inventory, and also the changes in the tax dynamics. The expectation is that we are going to continue to grow in all channels, even though the growth was lower than our history in the first quarter.
But we are going to maintain a growth in the next quarters. We see a lot of demand of the market, a resumption of occupation, elective surgeries increase. We are talking to people in the market, and this is what we see, and we are prepared to capture this double-digit growth along the year and marginally gaining share and also growing organically in addition to the acquisitions we made. The expectation is to resume the growth as early as the second quarter.
Very clear, Leo. Thank you very much for the answers.
Our next question comes from Leandro Bastos, sell-side analyst with Citi. Leandro, we are going to open your audio so that you can ask your question. You may proceed, sir.
Thank you. I have two questions on my side. First is about the OL agreements that are about to start this half of the year, and the second question is related to deleveraging. Naturally, the company has the ambition of continuing growing, and you are making efforts to talk about working capital with some suppliers. These are actions that are going to help the company to be deleveraged. What can we expect in the short term? How can we monitor the deleveraging process along the quarters? Thank you.
Thank you, Leandro. Thank you. Your first question, basically, the OL adjustments are based on CMED, so the average of all the categories is 5.6%, and this is what we are working on in the cost pass-through in the country. Which are going to mature as of April. They do not mature in the same month, but there is a concentration in the second quarter. And there are some exceptions.
Or maybe there are some discounts that have to be considered in the industry, but this is the basis. In relation to deleveraging, I need to stress what is dynamics for the year. Everybody's getting used to these dynamics. We have a higher consumption of working capital in the first three to five months of the year. This is a necessity of our business, and then you have a cash generation along the other months. Then we keep working with a target, which is to end the year 2 x the leverage. This is the objective of the company. This is the goal, and we are confident we are going to deliver that.
Thank you, Leo. A quick follow-up on OL, if you could. You said that it's close to CMED. But you have the price of the default. Are you talking about 5.6% with default? Just for us to understand.
In addition to CMED, for the composition of the total amount, you may have something related to the industry so that it can become more or less competitive. You can also have the effect of some fiscal changes, and if a tax is exempt, this is going to be reflected on the price, and you're going to pass through this. In terms of net, tax net effect, the average was going to be 5.6%, except some exemption or some exceptions.
Okay. That's very clear.
That's not a rule. As I said, we're going to be working on the basis. Then there are some default effects, but there are some positions that receive this regulation from the industry. But our expectation, our budget, is that we will be able to pass through at least the 5.6% that I mentioned.
Okay. Thank you. Very clear.
Our next question comes from Samuel Alves, sell-side analyst with BTG Pactual. Samuel, we're going to open your audio so that you can ask your question. Please, you may proceed.
Good afternoon, everyone. I have two questions on my side. I'm sorry, I insist. On the topic of cash generation, I would like to talk about the seasonality of working capital. It was very clear the consumption of higher working capital in the beginning of the year because of the mix in the revenue. It's clear. But I would like to understand if the seasonality in the working capital would converse or would be linked to all lines of working capital. You mentioned inventory a lot during the presentation. Also because of CMED and the establishment of default. But from the viewpoint of working capital, the problem was in relation to the days of suppliers.
Is this applicable to suppliers and days? Do they tend to be positive in the first month of the year and free up capital for the rest of the year? The other is the dynamics of gross margin onwards. We have the feeling that the gross revenue was affected in the first quarter. My question is, do you see room for improvement in the next quarter, especially on gross margin? Yes, that's it.
Okay. Thank you very much for the questions and for attending our call. Thank you very much for the opportunity of explaining cash generation, working capital. Yes, two components that we have this dynamics. We are talking more about the accounts payable than accounts receivable, because one is more stable than the other.
The inventory and accounts payable have negotiation that can be carried out depending on the cycle and the level of inventory, the demand of the client in one end, because they vary accordingly. We tend to see both normalizing, and then we look at cash generation. There is an effort for us to improve accounts receivable. All teams are working in order to improve our accounts receivable in a structural viewpoint. This has to do with seasonality. Seasonality impacts our inventories and our CP. We can provide more details if you wish, but these are the two lines impacted. In relation to gross margin, yes, we see room for improvement in this margin. There are things whose performance we would like to see, and we want to see the performance improving along the year to help our gross margin.
Public segment would help, nutrition segment would help, materials segment, disposable materials would also help, and also dermatology segment, retail, which is presuming to perform above the historical levels. These are all help our margins. You have the first impact of PFS in our mix, but we have several businesses along the year in addition to services. As I said in the beginning of the presentation, we see this potential that will help us put our margin up. We are confident that we are going to have an evolution in our gross margin. This is what we estimated. It is not different from our budget. The margin point where we are, where we need to get to if we have an important delta in terms of offset of beginning. We are starting from the point where we expected to.
Thank you, Leo. Good afternoon, everyone.
Our next question comes from Joseph Giordano, sales analyst with JP Morgan. We are going to open your audio so that you can ask your question. You may proceed, sir.
Hello. Good afternoon, everyone. Good afternoon, Leo. Thank you for taking my question. I would like to address the market dynamics, which tends to be more favorable due to the level of leverage in your competitors and maybe your major competitor is in a very delicate situation. I understand working capital was a bit heavy for this first quarter, but looking to the future, couldn't this be reversed? You may become the safe harbor for the industry, and we could have better purchase conditions and also other purchases and exclusivity agreement even. My second question is related to the fiscal aspect. There is a discussion of investments. I would like to understand how you see this topic. Thank you.
Hi, Joey. Thank you for attending the conference and for the questions. I think the first point you asked, first, we are going to have a very important discipline in financial deleverage and working capital. We have a commitment of reaching the end of the year with 2x the leverage, and this is one of the biggest priorities for the year. Clearly, we are going to look at growth and at management of cash generation and deleveraging. This is something that is going to be discussed every day. Because we understand that we have to grow with sustainability and working capital is vital. We have shown the industry this change in the dynamics in the sector. We want to show how the sector changed in the past five years, maybe because of the consolidation or other factors.
There is an important role to have health in the accounts payable and the working capital. We understand that economic difficulties are being faced by all the players. So even the small and average players. We are here as leader of the sector, showing the dynamics, and we are showing the solutions that we are developing in order to have a structuring change improvement in the working capital. But we are putting it on the tables that this is very important in order for us to keep our growth.
Yes, of course, we want to grow more than what we estimated. We understand there is room for improvement and the economic expansion that you mentioned, but we are going to do it with the discipline and the working capital as necessary. If we manage to have the accounts payable balanced, it will free up opportunities for us to grow even more, more than history.
This is André speaking. The dynamics that you mentioned actually happened, and we have had a lot of cooperation from the industry to understand the scenario and make the purchases and the negotiations. So favorable conditions have been made. This is dynamics that is going to help us in the future. As Leo mentioned, we have a big concern in all of our businesses. Now we are working at the working capital so that this can play out in a healthy way. This is a concern that we have, and we tend to be favored by this context as a whole.
This is something that we had a conversation that we had, and that started in the past, and now we are receiving the answers, and the answers have been very positive. In terms of the tax dimension, I am going to say what we already know. We have a work group monitoring this every day, every week. As a subvention for investments, we see benefits connected to investments. So we have no concern considering that everything that we learned about it. Juros sobre o Capital Próprio. Also, there is nothing related to impact. We are monitoring this, all those tax dimensions. We are watching the evolution. What we have been seeing is that all the tax changes that occurred in the past few years were making adjustments. Maybe the default went up or down. Also the agreements.
If we go back in time and look at the years, we see the chain balanced out itself, and we see that there are some margins which is very limited. We see that there are some situations that some players cannot even survive. So, as I said, we are mapping out all the developments, but what we have seen so far had no relevant impact on our businesses.
Thank you, Leo.
We end the Q&A session. I would like to turn the call over for the company for the final remarks. Thank you very much for attending the call.
We are very confident in executing the strategy for the year, simplifying our business, capturing synergy, delivering the growth target with the leveraging for the year, and put the company in a place which is more integrated so that we can start 2024 at an accelerated pace faster than what we do today. Thank you, everyone, and have a nice weekend.
The earnings conference call related to the first quarter of 2023 of Viveo has come to an end. The IR team is available to take any questions you might have. Thank you very much for those who participated, and have a wonderful weekend, everyone.