Good morning, everyone. Hope you are all doing well, and thanks for participating on our call.

Sales for the quarter were in line with last year, consumer products growing for the fifth consecutive quarter, and margins remained strong, notwithstanding continued cost pressures, once again underscoring KCM's resiliency. After Xavier takes you through the detailed results, we'll talk about our strategies and actions, as well as provide an update on our KCM Plus innovation, growth, and transformation strategies.

Let me turn it over to Xavier.

Hello, good morning, everyone. During the quarter, our sales were 13.4 billion pesos, in line with last year, flat in volume and in price and mix.

Net sales grew in consumer products, which increased 1.8%, with balanced contribution from volume and price and mix, while away from home decreased 4.7%, with 1.7% sequential growth, and exports were down 14.8%, driven by lower hard roll sales. Cost of goods sold decreased 2.9%.

Our cost reduction program once again had very good results and yielded approximately 450 million pesos of savings during the quarter. These savings were generated through a combination of global fiber contracting initiatives, changes in insourcing, and the use of alternative fibers, product redesigns, and the introduction of new raw materials in nonwoven fabrics, diaper geometry redesigns to improve material efficiency, and logistics and distribution efficiencies across our network.

These initiatives reflect ongoing actions across procurement, product design, manufacturing, and logistics. In addition to these actions, compared to last year, fibers were favorable, while superabsorbent materials and resins compared negatively.

The FX was lower, averaging around 8% less than last year. Gross profit increased 3.7%, and margin was 40.3% for the quarter.

SG&A expenses were 5.4% higher year-over-year, and as a percentage of sales were up 100 basis points. Distribution expenses were flat despite cost headwinds as we continue to improve our footprint and streamline logistics operations.

We are investing behind our brands, and our expenses also reflect increased costs for data purchased from our clients' platforms. Operating profit increased 2.3%, and operating margin was 21.9%, up 60 basis points year-over-year.

We generated 3.4 billion pesos of EBITDA, a 1.6% increase year-over-year, with an EBITDA margin of 25.5%, within the long-term range. Cost of financing was 456 million pesos in the third quarter, compared to 404 million pesos in the same period last year.

Net interest expense was higher due to additional debt issued. During the quarter, we had a 4 million pesos FX gain, compared to a 3 million pesos loss last year.

Net income and earnings per share for the quarter were in line with the prior year at 1.7 billion and .56 pesos, respectively. For the year, our sales are up 2%, and our EBITDA and earnings per share are up 7% and 8%, respectively.

We maintain a very strong and healthy balance sheet. Our total cash position as of September 30 was 20.2 billion pesos.

Our net debt to EBITDA ratio was .8 times, with EBITDA to net interest coverage of 9 times. Thank you.

Thanks, Xavier. A few brief remarks before taking your questions.

Overall, as we had a strong first half of the year, and I would say a less strong third quarter behind continued sub-par economic growth and domestic consumer spending. Given the depressed consumer sentiment and the economy, we expect weak consumer demand to stretch through the end of the year, which means retailers will continue to be cautious and focused on reducing inventory levels after a long and aggressive summer promotional season.

Under such a scenario, ensuring our actions translate into share strength, mix improvements, and opportunity capture is essential. Results on our consumer products businesses show that is the case.

Our away from home business is on its way to improved results. On the export side, we need to continue to work with our strategic partners to strengthen our combined North American supply chain.

Going forward, as we go into 2027, we expect steady improvements in demand, supported by an economic recovery that is slowly gaining traction. Some economic indicators starting to show improvements, private investment is increasing, and given the government's announced plans, public investment should also grow.

Industrial production has gained momentum behind export-oriented manufacturing and resilient construction activity, and the salary mass will continue to grow, among other metrics. All of this together should translate into improving growth rates and increased, although still moderate, domestic spending in 2027.

This, of course, would be much welcome news. On the cost side, the now long-running geopolitical tensions have translated into longer-lasting cost pressures, specifically in oil derivatives, resins, and transportation costs.

On the domestic side, increased labor cost has been a consistent headwind and will continue to be so in the future as we transition to the 40-hour workweek. As we move ahead, we will require dynamic and efficient use of our revenue growth management capabilities, as well as continued efficiencies in our operations and very strong cost savings programs.

More broadly, we will stay focused on enacting the strategies and actions we've identified as part of our KCM Plus initiative, namely: ensure our core businesses are performing well and our diamond categories are accelerating behind consumer-centric, relevant, and differentiated innovation, stronger consumer engagement, and improved commercial execution; achieving greater participation in private label, where we're making inroads; inserting ourselves into categories that represent important areas of growth in the future, including pet food; accelerate and deepen our efforts to consistently improve our end-to-end cost structure; and strengthen our skill sets to take advantage of the multiple opportunities and advantages presented by the evolving consumer, retail, and technology landscapes. Challenging times, but we have set a clear path for KCM to continue to deliver results, and have consistently shown the execution capabilities to make that happen.

We believe the coming years will be no exception. With that, let me open the call for questions.

Good morning, Pablo, Xavier. Thank you very much to take my question.

Two very quick one. Obviously, you've called it out, consumer products, well, they continue to grow.

They grew a little bit at a lower rate than in the first half. Two-fold question: one, if you could provide us what was kind of like volume versus price; and second, how much do you think of that was to a degree related to some of your competitors maybe being a little bit more aggressive on promotioning, and as a result kind of had market share movements within the quarter?

To understand a little bit better the dynamics in consumer products. That would be my first question.

Thanks.

Sure, Ben. Thanks for your questions.

On the growth on the consumer side, again, 1.8%, and it's split by half between volume and price and mix, 0.9% volume, 0.9% price and mix, evenly split. I think it's always the case that in the third quarter, after the summer promotional season, we see lower demand, as consumers have some product in their shelves, and also clients have some product in their shelves, so that was part of the slowdown on the consumer side.

On the competitors, we did see a more aggressive stances from them during the promotional season. As we've been a little bit more careful on that front to try and protect the value of the categories.

Our shares remained very, very healthy, we think it was the right strategy, and it's just as usually happens, third quarter being slower than second quarter. Having said all of that, there's no doubt that we have a backdrop of soft consumer demand.

I think we were all expecting it to be a little bit stronger during the second and third quarter given some of the actions that were taken, but it's still pretty soft. Some opportunities for improvement going forward as we see, as I mentioned, the economy starting little by little to gain some traction, and hopefully that endures.

If that's the case, we should see stronger consumer spending coming into 2027.

Perfect. Thanks.

Then following up on the cost side, you mentioned, obviously, that you're starting to see the impact from some of the geopolitical disruption causing, what, kind of like oil derivative pieces to starting to go higher. If we think about it on a year-to-date basis, until when did you have lower-cost inventory, and when did you really start seeing those higher oil derivative prices affecting you, and how should we think about it on a go-forward basis?

The cost pressures we started to see really back in the second quarter, and even stronger in the third quarter, because there's always a little bit of a lag. What we expected was that those would subside and that fundamentals will come to play a part so that costs would start to come down.

Given the geopolitical tensions have stayed where they are right now, we continue to see some of the pressures. What we saw in third quarter will continue through the fourth quarter, maybe at a slightly lower levels.

We'll see how this continues to evolve and see what happens coming into 2027. The costs put some pressure in the second quarter, particularly in the third quarter, and then we'll see some still hanging in throughout the fourth quarter.

Again, we'll see what happens coming into next year.

Perfect. I'll pass it on.

Thank you.

Hi, good morning. Thanks for taking my question.

Just a quick one regarding away from home. You're saying that if I understood this correctly, is that improving sequentially?

Any more color on which channels are improving, and how fast it's improving, and maybe if you see that as well in so far this fourth quarter? Thanks.

Sure, thanks for the question, Antonio. Yes, we did see in the third quarter a sequential improvement on away from home of 1.7%, and particularly a little stronger September, which was good news, and hopefully that'll continue through the fourth quarter.

I wouldn't say that it's a particular channel that was showing improvements. I think overall, again, as the economy starts to gain a little bit more traction, particularly in away from home, we're starting to see volumes pick up.

We expect a slightly better fourth quarter and hopefully a much better 2027 as we go forward.

Thanks a lot.

Thank you very much. Good morning, Pablo, Xavier, and thanks for taking my question.

When you think about the inventory buildup in the trade this year, is it comparable to prior years, or do you think it'll be a slightly bigger friction than past years because of maybe the buildup and perhaps a weaker consumer response? Then given the expense pressures and from oil derivatives and other areas, how are you thinking about pricing right now?

Sure, thanks, Bob. Thanks for the questions.

Look, the inventory buildup, I don't think it was very different from prior years, maybe slightly so in certain categories given that we also had the World Cup, and there was the expectation that we would see higher consumption in some specific categories, but not too different from prior years. I think what's different is the fact that, again, the consumer sentiment is pretty weak.

Retailers are seeing demand weak, they're being, I would say, extra careful when they think of their inventories and managing the working capital. We are seeing our clients really being very, very careful when it comes to inventories, and how to flow through this fourth quarter and into 2027.

We'll see how it all evolves, but there's certainly clients being cautious out there. In terms of pricing, you've got two things, because as we've mentioned, you've got headwinds from raw materials that have continued for longer than we expected, and then you have the labor costs that have been building up over the past years, and then transportation costs also a headwind.

All of that against a backdrop of still soft demand that we've just described. We're very carefully analyzing to see what we need to do going forward and how we should act.

It's very likely that we will be moving ahead with pricing, but we will not do it as we've done in the past, that is just across the board and a specific percentage. We're going to be looking quite frankly at every category, and even in some cases specific SKUs, to identify the most important opportunities and move on them going forward.

No, it's very helpful. Just one other follow-up: when you think about innovation, and you touched on technology, and there's some radical changes in terms of some of these product redesigns and alternative fibers, how do you think about opportunities for further innovation and cost savings moving forward, especially things that are technology-based, or discoveries is accelerating because of some of technology applications?

Sure. No, just as you say, many of these things are accelerating, and nonwovens and other materials that we're utilizing to bring innovations to bear, and we've done quite a good job this year with innovations in fem care, adult care, diapers, and going forward, we're very excited with what we see.

We're introducing a new diaper right now with a new absorbent core that it will be first in market in Mexico and by far the best absorbent core in the market, and we expect that to flow through to our products in the coming years. Just like that, we're seeing quite a bit of interesting innovations in different categories, different products, and we're taking advantage of what you mentioned of the fact that some of these things are accelerating so that we can bring innovation faster to market.

When I look at the pipeline coming into 2027, we feel very excited about what we will be putting on the table for the consumer, and I think that's very, very important. The same holds true, Bob, when it comes to costs, right?

We've always had this culture ingrained in the company of bringing down costs and just trying to be as efficient as possible. It is also true that the current context and probably future context will require us to double down on that.

We have plans, and with technology accelerating on many fronts and many opportunities on automation and digitalization, etc., we're accelerating on all of those plans so that end-to-end we can continue to improve our efficiencies and costs going forward. Hopefully that'll be ramping up and accelerating during next year and 2028, and again, we've got the plans.

We just need to get out there and execute, but very exciting what we have in the pipeline.

No, it's very encouraging. Thank you so much.

Thank you, Bob.

Hello Pablo, Xavier, can you hear me?

Yes, Froylan.

Perfect. Thank you so much for taking my question.

Two questions, if I may: one on private label. Can you give us an update how is that business progressing relative to your expectations?

How are you thinking about balancing further participation in private label with protecting obviously your growth and profitability of your branded products, that's the first question. Second, on your pet food initiatives, could you just give us an update on where you are, how the progress so far compares with your initial expectations?

Thank you so much.

Sure, thanks, Froylan. Let me first take private label.

I think we're making inroads, we're making progress with a few of our clients, and we expect the business to accelerate significantly next year. Yes, we're pushing, as we've said before, strategically to participate in some categories with some clients, but as I just mentioned also supporting our brands very aggressively through innovation, communication, and consumer engagement.

We're pursuing both strategies, so far with good results, and we expect during 2027 that both growth within our private label push and within our categories will accelerate as we see a stronger, hopefully stronger, domestic consumption environment. When it comes to pet food, good results.

It's been a little bit of a year, and particularly on the premium side of the business, we've seen very good response from consumers to our offerings, which is, again, very encouraging. We're, no doubt, learning quite a bit of the category and putting that to practice, we will be bringing to market some important improvements and innovations to our products, and we continue to grow as expected.

As we've always said, we're in this for the long run. This is going to take some time.

It's a big category, but also a very competitive category with very good, entrenched players. We like what we see, we like the consumer response, and we will continue to invest behind our innovations in the category.

Thank you, Pablo. If I just may follow up on the private label, how meaningful do you think this private label acceleration would be in 2027?

Is it more of a push kind of situation, the fact that you are, let's say, gaining share into the category against other players, or it's simply the category growing and you're growing with it? Have you sensed any, let's say, cannibalization towards your branded portfolio at this point?

Good. Sure, this year the business will likely a little bit more than double in size, and we expect the same thing to happen next year.

Good growth rates, and it's a combination: we've gained some business, that of course helps the growth, but also in some of the categories, private label as a whole is growing. It's a combination of us getting into the market and participating, and private label as a whole growing.

That's what's bringing growth behind our brands. As we see some of the commitments we've made to some of the clients going forward, that's what we're very confident that we'll be able to even double the business again next year.

Now, for the most part, that hasn't been against our products. Again, our shares remain very healthy, particularly when it comes to value shares.

In pretty much all of the categories, they're either increasing or stable, and very, very healthy.

Thank you so much, Pablo, Xavier.

Thank you, Froylan.

Hi guys, thank you so much for taking my question. Just a quick one here from our side.

We would like to know if you have any updates on the Kenvue transaction, if we should expect anything by year-end right now, or maybe 2027. Thanks.

Thanks, Luis. Thanks for the question.

Look, the priority of our partner here in the past months has been getting all of regulatory authorizations to move ahead and actually closing the deal, and we expect that they'll tell you, but it's getting closer. That's been their priority, they've been focused on getting that done.

We've made progress with them on analyzing Kenvue Mexico, but we haven't been able to come to a conclusion. As they close the transaction here in the coming weeks, we expect our analysis to speed up, and we will definitely have a resolution on the matter by the fourth quarter.

Moving ahead, not as fast as we would have liked, but we perfectly understand our partner had to just focus on getting this done. Now we can really in the coming weeks sit down and take a closer look and figure out where we take it from there.

Perfect. Thank you so much.

Thank you.

Hi, good morning. Thank you for taking my question.

The peso has been an important tailwind for your profitability. If we were to see a meaningful depreciation next year, how much of that pressure could you offset through efficiencies or pricing or procurement?

Would you remain with your 25% to 27% margin?

Thanks for the question, Regina. Let me just state once again, our 25% to 27% margin is our long-term range margin, there might be quarters where we're under that number, and certainly quarters where we're ahead of that number, like second quarter of this year.

That's our long-term range, and we feel very comfortable that we will be able to stay within that range. Again, you might see some movements within quarters.

Now, to the crux of your question: yes, if the peso depreciates even further than it has right now, it would be another headwind. We don't know if that's going to happen.

It's been a nice tailwind here in the past quarters. We'll see how it all evolves, but it's one of the things we're taking into consideration as we think of, again, our raw material costs or labor costs, transportation costs.

FX comes into the mix, and we take all of that into consideration and put scenarios together to figure out how we move on pricing and what we want to do in terms of pushing mix going forward. Rest assured we're doing all of those analysis, and we will make the decision when the time comes, and we'll carefully consider every input and act as necessary going forward.

It's not just on the pricing side, but again, as I mentioned, it's also on the cost efficiency side, where we're, as I mentioned before on the call, being very, very aggressive on bringing greater efficiencies and accelerating, even accelerating, our cost reduction program, which has yielded very, very good results. We're working on figuring out how to even accelerate that.

Thank you. That is very, very clear.

If I may ask another question: we noticed an increase in capex this quarter. Could you maybe give us some color on where those investments are being directed?

Hi, Regina. I'd probably say that the spike that you're seeing in capex is just by the nature of the cash outflows, but the capex will remain pretty much in line with what we've been mentioning around one between 100 120 million for the year.

That's what we're expecting for the following years. In terms of the projects where we are investing, it's really broad-based.

There's a lot that we're investing on to bring innovation to table. I mentioned, for example, the innovation that we're bringing to market right now on diapers.

We did some in incontinence and, adult care and fem care. We've got quite a strong innovation pipeline going forward, a lot of capex will go there, but also a lot of capex goes behind productivity and efficiency measures and even capacity where we need it.

It's really a combination.

Perfect. Thank you so much.

Thank you.

Thank you.

Hi, Pablo, Xavier. Hope you're well, and thank you for the space for questions.

Could you please share some color on the sequential performance of the consumer products top line, maybe in particular how volume and price and mix grew sequentially? Maybe another question from my side: maybe it's too early to tell, but what would be a constructive scenario for the consumer products top line growth heading into 2027?

Thank you very much.

Thanks, Jorge. Thanks for the question.

Consumer products business was sequentially down around 6%. Again, not a surprise.

Third quarter is always quite a bit slower than the first and second quarters as clients build up for the summer promotional season pretty much in May, June, now even in April, and then they bring that down on the quarter. Again, not a surprise, but we certainly would have liked to have a stronger performance during the quarter.

Still, fifth consecutive quarter of growth in consumer products, and we need to keep that going. When it comes to 2027, and again, hopefully some of the signs of the economy getting some traction continue and strengthen hopefully, and we see stronger consumption, and if that's the case, we feel very confident that we can get back to growing at the rate we grew the first half of the year, mid-single digit for consumer products.

We need to see that domestic consumption pick up for that to happen. We are working aggressively in both cases: if it happens, we'll have the innovation plans to be able to take advantage of it, and if it doesn't materialize, those innovation plans should help us gain some share, gain some traction, and also post better numbers.

We'll see how the consumer evolves.

Thank you, Pablo. Very clear.

Thank you, Jorge.

Thank you all again for participating on the call. This is our last call of the year, we hope you have a terrific end to the year and look forward to talking to you early in 2027 and beyond.

Thanks again for participating.