2023-05-02 17:27:09 ET
Alsea, S.A.B. de C.V. (ALSSF)
Q1 2023 Earnings Conference Call
May 2, 2023 11:00 AM ET
Company Participants
Armando Torrado – Chief Executive Officer
Rafael Contreras – Chief Financial Officer
Conference Call Participants
Alan Alanis – Santander
Alvaro Garcia – BTG Pactual
Kamila Mercenario – SURA Investments
Thiago Bortoluci – Goldman Sachs
Rodrigo Alcántara – UBS
Antonio Hernandez – Barclays
Andrés Ortiz – BTG Pactual
Presentation
Operator
[Call Starts Abruptly] Pre-IFRS 16 of 16% to MXN17.6 billion. Same-store sales for the quarter were up an impressive 23.5% year-over-year, driven significantly by 12% same-store orders. EBITDA pre-IFRS 16 was MXN2.3 billion for the quarter, up 23.6% compared to the same period of last year with a margin of 13.1%. This quarter results demonstrating a strong demand of our brands and the company high profitability, especially in the face of inflation, increase in minimum dollar rate and elevated energy costs in Europe and affordable exchange rate, exchange rate that affects the – represents 10% points less in sales growth.
We serve over 11.5 million orders in the delivery channel this quarter, delivery made of 17% of total sales, the same share as of that fourth quarter of 2022. The steady growth of delivery is in line with our overall sales and emphasis the performance on this trend.
In the quarter, we opened 20 new corporate restaurants and eight store franchises across all regions. Of those, 50% were Starbucks and 29% went Domino's Pizza. At the end of the quarter, Alsea has over 4,400 stores and over 1,000 store franchisee stores and more than 75,000 team members. In line with our expansion strategy, last April, we signed an agreement to operate and develop the Starbucks brand in Paraguay, introducing the country's first Starbucks location. This expansion is fully aligned with Alsea’s Starbucks role strategy. Currently we operate over 1,600 Starbucks location across Mexico, Europe, and South America.
The total CapEx for the first quarter was MXN16 million, of which 48% was allocated to maintenance, 29% to store openings and remodels, and 23% for IT and other strategic projects. In line with the company's leverage strategy, I'm pleased to share that we are now below pre-pandemic leverage levels.
I'd like to highlight a few of the important moments along this journey. As you can see in the graph, at the end of 2018, we acquired Grupo Vips in Spain and our PFRS leverage net debt-to-EBITDA was 3.7x, which then went up slightly with acquisition of Starbucks in France and Benelux to have the leverage at 3.9x. Then during the pandemic with the restaurant closures and increased cost of global level, our leverage ratio increased significantly.
As we recover, we've been able to increase sales while maintaining an increased share of delivery and reducing costs and debt. Our pre-IFRS 16’s leverage ratio is 2.4x, net debit-to-EBITDA and we will continue to emphasis our leverage strategy. In line with our digital transformation strategy, our customers with accounts in our loyalty programs have a higher average ticket, visit us more frequently and provide us with a value to data to learn how to improve our service and the consumption habits.
Our digital sales that include e-commerce aggregators and loyalty represents during the quarter a 30% of share of the total sales. Standing out Domino's Pizza with 40.6 penetration of digital sales. This MXN5 billion on digital sales at the end of one – the first quarter of 2023, represents a 23% growth over last year, by global Starbucks rewards growth of 44.5% versus same period of 2022.
We reached 10.4 million of digital customers with activity within 365 days, with a growth of 6% versus last year. In terms of activity, digital customers were actively with 180 days. We reached MXN6.6 million with an increase about 3% versus last year. Finally, I would like to give you a quick overview of our main ESG achievements for the quarter.
In order to identify our global sustainability strategy, priorities, we update our materiality assessment and exercise that we perform every two years. For this update, we use a double materiality approach for this time. This identifies the most significant and external and financial ESG factors that influence our company performance. Allowing us to address market demands, we engage in a consultation process with senior management and key stakeholder groups across eight countries in all regions that we operate, including Mexico, South America and Europe.
Our ESG related actions and plans will focus on addressing the material issues identified in this study. Talent, attraction and retention. Number one, two, food quality and safety. Three, health and safety of the customers and employees. Four, equity, diversity and inclusion, and five, energy and emissions and achieving our 2030 targets.
We will be delivering yearly progress updates for the priority indicators we track as part of our ESG strategy. The principle findings of the materiality assessment will be incorporated into our 2022 annual report will be – which be able available in early May on the company's website. Regarding our global sustainability strategy, which consists of three pillars, balance, growth and development. During the first quarter of 2023 under the balance pillar in Mexico, we recovered over 191,000 liters of used vegetable oil for biodiesel productions.
Additionally, we installed solar panels at two of our facilities in Spain. These panels are expected to generate enough clean energy to meet about 30% of the facilities energy needs. Under the growth pillar, our brand and distribution centers are regularly assessed for quality and safer standards.
As of the development pillar in Mexico, Va por mi Cuenta movements provide over 235,000 meals to over 4,000 children through six society organizations. In collaboration with a Mexican food bank network, seven tons of food were donated in the first quarter, benefiting over 32,000 individuals. In Spain, we have primary commitment to the United Nation Global Compact by signing the country level charter and entering into an agreement with the NGO, [indiscernible] to support the integration of people with disabilities into our workforce.
Now I will pass it to Rafael so we can give you a more detail overview of our brands, regions, results and balance sheet items. Please Rafael.
Rafael Contreras
Regarding our brands, the Starbucks reported an impressive year-over-year same-store sales growth of 36% in the first quarter, with a growth in orders of 20%. In Mexico, the Starbucks same-store sales were up over 30% year-over-year. While in Europe, they increased by 27% and in South America up over 26%, excluding Argentina.
Domino's Pizza, same-store sales were up in Spain, Mexico, and Colombia by 6.4%, 2.7% and 1.3% respectively. This growth came despite a difficult comparison basis versus the first quarter of 2022. Burger King reported another positive quarter posting increase in Chile, Mexico and Spain of 12.3%, 8.6%, and 8.3% respectively.
After officially recovering to pre-pandemic levels late last year, Vips Mexico continue with a strong first quarter same-store sales up 13.5% year-over-year with orders up 10%. The brand continues to be focused on improving its in-store experience and products. In Spain, Vips also reported a strong first quarter same-store sales increase of 21% versus the same period last year. The Casual Dining segment also had an impressive quarter with same-store sales up 16% and orders growing by 12% versus the first quarter of 2022.
Looking by region. We were pleased with Mexico performance as quarterly sales increased 22% year-over-year, cost were in line with last year and adjusted EBITDA pre-IFRS 16 was up 19.7% to MXN2 billion. In the quarter, we closed our JV agreement with Europastry who will be providing bread and pastry products to our sales stores in Mexico. This transaction added MXN60 million in EBITDA to Mexico P&L.
In Europe, sales were up MXN7.6 billion to MXN5.6 billion and adjusted EBITDA was down MXN9.2 million pre-IFRS 16 to MXN726 million. However, when excluding the effects of foreign exchange fluctuations sales grew by 24% and adjusted EBITDA was up 4%, underlying a significant impact on overall results. Despite the ongoing challenges of rising inflation and energy cost demand was resilient. We remain hopeful about sales heading into the summer months.
South America posted a strong 58% increase in same-store sales for the quarter with adjusted pre-IFRS 16 EBITDA increasing 32.8% to MXN504 million. South America’s positive results were driven by a strong demand, reduced cost and successful product innovation and digital strategies.
Moving on to detailed overview of our results and balance sheet. Despite our sales in Europe costs rise resulting from not being able to mitigate inflation in important products, the increasing cost of energy in Europe and wage increase across different regions where we were able to offset part of the impact with some strategic initiatives will help us to mitigate the impact in the consolidated cost as a percentage of sales, only increasing 1.3 percentage points year-over-year, reaching 33.1%.
During the quarter, we reached different agreements with our suppliers. One, a benefit in the price of chase through a decreasing cost of 9% versus the same period of last year, overstocking our needs until December 2023 in Colombia and September 2023 in Mexico. A benefit in the cost of same core – some core products that we fixed price for the year like wheat flour, pork ribs, oil, among others. In our distribution center in Mexico, we have been innovating in order to improve some processes within our supply chain.
As an example, we reduced the sugar use in the manufacturing process of different products and we centralize in our industrial kitchen to produce some dishes to guarantee the quality and consistency in our stores. Despite cost increases, our pre-IFRS 16 EBITDA was MXN2.3 billion for the quarter, up 23.6% compared to the same period of last year with a margin of 13.1%. Post-IFRS 16 EBITDA was MXN3.7 billion for the quarter, up 6.6% with a margin of 10% – of 20.9%.
Operating cash generation was healthy at MXN4.5 billion for the quarter, which allow us to continue to both deleverage and invest in our organic growth. In Europe, energy costs in the first quarter of 2023 will be elevated – still elevated, up 110% year-over-year, which impacted the region EBITDA compared to a year ago. However, energy prices continue to decline on a sequential basis from the third quarter 2022 peak.
As you can see on the graph, in the third quarter of 2022 energy costs as a percentage of sales were at a historic high of 6.8% with electricity at €308 per megawatt hour. Since then, energy sales – energy share of sales fell to 4.3% in the fourth quarter of 2022 and to 3.2% in the first quarter of 2023. This quarter, we pay an average of €97 per megawatt hour. After a warm winter, and with increasing renewable energy projections in Spain and France, Alsea will be able to find new reasonably price options in the second half of 2023. We continue to work with our team of energy experts in Europe to analyze the possibility of securing long-term contracts.
Our net income pre-IFRS 16 for the first quarter increased 41.1% to MXN564 million. This result comes despite an increase in cost of products, energy cost, financing costs and higher tax rates. In the first quarter of the year, we achieved a pre-IFRS 16 earnings per share of MXN2.48, including IFRS 16 earnings per share rose to MXN2.13. In January 2023, the General Shareholders Meeting approved the cancellation of 18.5 million ordinary shares that had been reported in market transaction during the last year representing 2.2% of the outstanding total shares. And last week the General Shareholders Meeting approved another cancellation of 4.9 million ordinary shares representing 0.6% of the outstanding total shares.
In the quarter, we paid MXN86 million of amortization, our pre-IFRS gross debt decreased MXN3.3 billion year-over-year, closing at MXN26.3 billion at the end of the quarter. This reduction in debt corresponds mainly to the devaluation of the euro against the Mexican peso and debt amortization during the period. Our pre-IFRS 16 gross debt to EBITDA ratio at the end of the quarter was 2.9x and post-IFRS 16, 3.3x, 0.6x less than last year.
Regarding our bank covenants, looking to our pre-IFRS 16 gross debt to EBITDA ratio, we ended the quarter at 2.9x and EBITDA to interest paid at 3.4x. The debt structure at the end of the year was 96% long-term with 65% in Mexican pesos and 35% in euros. Our target is to still deleverage the company in the coming years.
I would like to quickly go over the guidance that we gave in March at Alsea Day. We expect to open between 250 and 280 stores of which much most are corporate stores with about 70 to 90 so franchises. Regarding CapEx, we are expecting MXN5.5 billion in the year. Same-store sales should come in around 14% to 17% and revenue above 13%. We are guiding EBITDA pre-IFRS 16 to grow over 15% with a margin of over 13%, our gross debt to EBITDA ratio of about 2.8x and return on equity of 18% to 19%. Post-IFRS 16 EBITDA should grow over 10% with a margin of over 20%. Our gross debt to EBITDA ratio about 3.3x and return on equity of 21% to 23%. This quarter results put us on track to achieve our full year guidance.
I will now pass it back to the operator for the Q&A session. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions] The first question is from Mr. Alan Alanis from Santander. Please go ahead.
Alan Alanis
Thank you so much. Thanks for taking my question. Congratulations on the results first of all. I have two questions. We’re seeing some weak – a short-term question and a long-term question. The short-term question, we’re seeing some weakness in consumption during the month of March. Could you tell us if you’re seeing also some weakness in March and April in Mexico specifically? That’s the short-term question.
In long-term, could you help us reconcile the growth of EBITDA pre and post-IFRS. And I’ll explain where I’m going with the question. We know that you did a lot of renegotiations on the leases during the pandemic and some of the leases became more variable than fixed and so much. Where are we going to start seeing a growth in pre and post? I assume maybe that should be the first question. I assume that the difference in the growth in pre and post-IFRS has to do with those negotiations of the leases. And if that’s the case, when do you think we’re going to start normalizing and seeing both growth in terms of post and pre-IFRS EBITDA growing at the same pace? Thank you so much.
Rafael Contreras
Okay. In terms of pre and post-IFRS-16, this quarter we open the line of rent, so you can see the benefit that we had last year in terms of rents because of the COVID benefit that we had first and then this fourth quarter and this first quarter that we have more viable rents than fixed rents. So you can see the impact in each quarter in terms of the line in rents. What we are projecting is after the third quarter, you’re going to see the same – it’ll normalize the pre and post-IFRS 16.
Alan Alanis
Perfect. That’s very useful. I’ll look into that. And that’s a very clear answer. Just as clear as your…
Armando Torrado
And Alan, regarding the sales in March, we really see a very small slowdown because we were – even in January and February versus last year increase as I told you, New York was head big, no. But in April we are also – we just closed month yesterday, and we are in line with our budget and with guidance.
Alan Alanis
That’s very clear. Thank you so much for your answers.
Operator
Thank you very much for your question. Our next question is from Mr. Alvaro Garcia from BTG Pactual. Please go ahead.
Alvaro Garcia
Good morning. Good morning, gentlemen. Two questions. One on Vips in Mexico. You mentioned same-store sales growing 13.5% and traffic growing 10%, which seems like there’s sort of some investment in price there to get traffic back in the store. And I guess my question is sort of do you think that strategy’s playing out and how long should we expect that strategy and what sort of specific initiatives? Is it a breakfast thing? Is it a coffee thing? Is it a lunch thing that’s really driving that traffic at Vips? Is it a consumer thing? Sort of more of a top-down thing? I’d love to hear your thoughts on how Vips traffic has rebounded.
And my second question is on Domino’s. You mentioned the tough comps, but I’m not sure if there’s anything else in Mexico and Spain that is driving sort of, let’s say results that are below average. We’d love to hear your thoughts there. Thank you.
Armando Torrado
I think in Vips we are really very happy with our results. I mean, having traffic 10%, that’s what we are looking for, especially that family business is driving by traffic, the penetration is high. So at the end we did – we went back to basics in regarding price, and actually it was – we briefly touched prices. We did some bundles, we did some – through our promotions in first four, nine weeks and then again another eight weeks. We have very nice results going in TV, going in advertise, so I think we are back there.
We have also very good results in the cost, the controlling of costs, controlling of labor. So EBITDA store level, we are happy with our results and they’re being strong. We have a lot of opportunities still to go. So I mean, where that as breakfast is coming back, breakfast in that, especially in Vips in Mexico, represents a high percentage of our sales. We are growing breakfast in a good matter and also lunch. So we also turn around with Coke, Coca-Cola is our new vendor, our new supplier. We are doing some good things with them and driving promotions. So results are good in Vips.
Regarding Domino’s, I mean, it’s been a little bit tougher than in other brands, I can tell because we were open last year full hands. Last year probably some restaurants were open, shopping center 70% of capacity of 80% of capacity in Domino’s, we’ve been open since the pandemic. We never closed. So there was a little bit less growth, but I will be able that – we just, like I told you in New York we did a good promotion starting 15th of March for carry out, pizza start in MXN145, and you will see the results in the next quarter.
But we are very, very glad about how is the behaving in carry out. Carry out in Mexico, it’s a bigger pie than delivery that we own already the category there. So things are moving in a very well north position with good headwinds for us in the pizza category.
Alvaro Garcia
Great. Just one last follow-up. If you could remind us what sort of what number of Vips in Mexico you’ve – we’d be able to classify as new, let’s say what part of the process are we in terms of maintenance CapEx and sort of revamping old Vips in Mexico? Do you have that number by any chance?
Armando Torrado
You want to say regarding portfolio, how many stores we have remodelled? How many we have…
Alvaro Garcia
Remodelled, yes, remodelled.
Armando Torrado
We are about 90 stores more to go for remodel out of the 240 more or less.
Rafael Contreras
And we are trying to win remodeling 100% in three years. So we’re going to remodel more than 20 this year. And another thing that helps Vips in Mexico is that offices are crowded. So that helps because that kind of people is the one that attends Vips.
Alvaro Garcia
Yes. Great. Thank you very much.
Armando Torrado
Thank you, Alvaro.
Operator
Thank you very much for your question. Our next question is from Ms. Kamila Mercenario from SURA Investments. Please go ahead.
Kamila Mercenario
Sorry. I think it’s listening. My question is a very fast one. It’s only how comfortable do you feel about your debt – in terms of your debt?
Rafael Contreras
As you can see, we have deleverage during the past quarters and the past years. We feel comfortable going lower than 2.5x, but with this trend, we think we’re going to be at 2x in a couple of years, and we feel pretty comfortable at that number 2x net debt to EBITDA.
Kamila Mercenario
Okay. We can expect that at the end of this year, or…
Rafael Contreras
No, at the end of this year, we – as I put in our guidance, if you see the number that I give in our guidance is to be at gross debt EBITDA at 2.8x, gross debt.
Kamila Mercenario
Okay. Thank you very much.
Operator
Thank you very much for your question. Our next question is from Mr. Thiago Bortoluci from Goldman Sachs. Please go ahead.
Thiago Bortoluci
Yes, sure. Good morning, everyone. Thanks Armando, Rafael for taking the question and congrats on the results. I would just like to reconcile and hear a little bit more from you on the guidance, right? I think the first quarter you delivered impressive same-store sales of 23%, and we’re sticking to your top line growth guidance of 13%, right? Obviously, we do recognize that there is FX, there is a challenging comp base going forward, but just like to hear from you if there is anything on the consumption background that makes you a little bit more cautious on the forward. That’s the question. Thank you very much.
Armando Torrado
No. The guidelines, it went for 14% to 17%, and that’s the guidance for the whole year. No, Rafael.
Rafael Contreras
Yes. That’s the guide for the full year, but something that helps us in the first quarter was Europe, because last year in Europe was Omicron. So Europe has this quarter a pretty high same-store sales growth that it can maintain the same pace for the second, third and fourth quarter. So that’s why you see a full year of around 14% to 17%. It’s a tougher number last year for Europe in the coming quarters.
Thiago Bortoluci
And just to make sure – thank you very much, Rafael. And just make sure you’re on the same page. 14% to 17% same-store sales, but top line, you are still at 13%, right?
Rafael Contreras
Exactly right.
Thiago Bortoluci
Awesome. Thank you very much.
Operator
Thank you very much for your question. Our next question is from Mr. Rodrigo Alcántara from UBS. Please go ahead.
Rodrigo Alcántara
Hi. Good morning. Rafael, Armando, can you hear me?
Armando Torrado
Perfect.
Rodrigo Alcántara
Yes. So two questions, the first one for Armando. On Starbucks, in your opinion or can you share with us what has the main driver of the same-store sales – impressive same-store sales that we have seen Starbucks, would you say that is more like good environment macro driven, or would you attribute to any commercial strategy that you have implemented? Would like to hear – talking about Mexico, would like to hear your thoughts about that.
And the second one would be for Rafael. CapEx at 5.5% it’s already kind of like a CapEx pre-pandemic, right? So just curious your thoughts here on the investment cycle of Alsea as you reach to more normalized levels of leverage. In your view, I mean 2024 going forward, what kind of like normalized levels of CapEx should we expect? Just to get a sense of the cash flow generation of Alsea going forward. Those will be my two questions. Thank you very much.
Rafael Contreras
Yes. Regarding Mexico, I think everything has been involved in operations. We were very constant in operations. High demand is there and we are taking that advantage and we are very focused and have the partners in the stores that we need to in order to fulfill that demand that we are having. If you go to the drive-through stores right now, we are gaining those lines in two and a half minutes. We have over 220 drive-throughs around Mexico that are being just impressive growing and thus just taking advantage of the technology in operations with tablets outside – in the airports with tablets outside.
So everything is just how we fulfill the good labor that we do with the hands of our partners. So I think one is operations, yes, there’s other promotions. So there’s other – we don’t promote as in pricing Starbucks as you know in Mexico, but we do have new products. There were two nice record weeks in the quarter. We never expect it, but there were nice two record weeks regarding products that we launch in different digital platforms, new digital platforms that you’re using. So that is also driven.
As you saw also in delivery, we are up to really – we sold same amount of money – same amount of orders from Q4 of 2022. So that’s impressive also how we are really pressuring the delivery. And right now, we are opt from that brand and also Starbucks Rewards. Starbucks Rewards, it’s been great. It’s been a great platform that we constantly grew our ticket average. We see customers coming more often, so we are just taking that advantage and to fulfill their needs and then to come back, they're happy with the service product and image that we provide.
Rodrigo Alcántara
Yes, that's great. Thanks Armando.
Rafael Contreras
Okay. In terms of CapEx, we are going forward around 7% of sales will be the amount of CapEx that we will have, to open 220 new openings is the number that we can maintain for the coming years. But also we have to maintain our stores in a pretty good shape. So around – the number is around 40% of the catalyst will be for new openings, and the rest will be maintenance, remodeling and all the IT projects that we have. But the number is going to be around 7% of sales.
Rodrigo Alcántara
Okay. That's clear. Thank you very much, Rafael.
Operator
Thank you very much for your question. Our next question is from Mr. Antonio Hernandez from Barclays. Please go ahead.
Antonio Hernandez
Hi, good morning, Rafael and Armando. A quick follow up on Europe, sorry, you mentioned the Omicron condition and of course that's impactful. You also mentioned in terms of cost, how energy costs having trending downwards sequentially, but overall, how do you see consumption and excluding that come based from Omicron? How are you seeing consumption trends in the region? Especially in the last weeks of the quarter and first weeks of this quarter as well.
Armando Torrado
Actually – hello, Antonio, how are you. Actually, I'm here right now in Spain, as you can see, and I've been just going on in the market the last six days, and I'm going to be another five days here. And I think we are – I think we have a better outlook for the second quarter than ever. First of all, because as Rafael said, energy prices are way, way down since our budget were, then we don't see any more inflation products that are affecting, by the way, we have some two or three good news of – in cost of woods. And we just – I think we're going to have probably the best quarter here, summer is approaching.
I mean, right now, the city looks just full of people. Tourism is back in France, tourism is back in Barcelona and in Paris, Barcelona and Madrid that we there, in those three cities, we probably do more than the half of the volume than we do in Europe. So we will very confident that we are going to achieve good results here in Europe. We see strong demands in Vips for example, I was in Vips this morning, and it's not labor day today and yesterday and stores were well operated with the people ready. So I think we were surprised with a nice year, a quarter that we had last one.
Antonio Hernandez
Okay. Perfect. Would you highlight something in terms of formats, maybe Vips or Starbucks or overall a healthy consumption?
Armando Torrado
No, I think, of course, Vips which is very surprising us and as a casual, but Starbucks also just in France, Spain, it look strong, good. And our programs in France with Starbucks for Everyone, just a new program that we launched from loyalty is working well. We just have been increasing frequent customers or customers that come and subscribe to our loyalty programs in a very steady and faster way. So that gives us a good advantage. So I think there is nothing when – there's nothing that wind is up with us both concepts are doing well, Domino's is also doing well. So I think in the whole concept, all of our brands are positive and still growing same-store sales, but as that's what the work that we achieve for now.
Rafael Contreras
Just to give you a number, it's – same-store sales in Europe for April. It's around low teens.
Antonio Hernandez
Okay, perfect. Perfect. Rafael and Armando, thanks a lot. Have a great day.
Rafael Contreras
Thank you.
Operator
Thank you very much for your question. Our next question is from [indiscernible] from JPMorgan. Please go ahead.
Unidentified Analyst
Hello, everyone. And thank you for taking my question. I hope you can hear me well. So the first one is regarding CapEx plan, so you have a guidance of MXN5.5 billion for the year and as per what I see here, you deployed about 11% of this in the first quarter. So I want you to understand better how do you plan to distribute this CapEx across the remaining quarters of the year? And if you see a possibility of lowering this CapEx guidance that you have for 2023. And the second question would be on working capital. So I understand that seasonally you have a working capital need usually in the first quarter of the year, but if you could explore a bit more on the trends of the different accounts there, that will be very helpful. Thank you very much.
Armando Torrado
Well, for the first, in terms of the breakdown of the CapEx for this year that we mentioned, it's going to be around MXN5.5 billion. Around 30% of that number is going to be for the new openings for the corporate stores that it's between 180 to 200 new units. Then we have a maintenance of around 28%, remodeling 17%. And the rest is for the IT and digital projects that we have for the year. Every year, the first quarter, it's the investing CapEx is lower because the openings are mostly in the third and fourth quarter. But we think we're going to achieve this investment. As we mentioned, also, we are going to open mostly in the brands that are more profitable, that is Starbucks and Domino's. So around 70%, 75% of the new openings are going to be in those brands. In terms for the full year, for the working capital, we expect a positive working capital of around MXN300 million to MXN400 million for the full year.
Unidentified Analyst
Thank you. Rafa, if you could just go through the trends and the inventories and payables and receivables lines that you have there in the first quarter, that will be helpful.
Rafael Contreras
Yes. In the first quarter, as I mentioned, also we overstock this in Mexico and in Colombia. The amount of this overstocking, it's around MXN300 million and MXN330 million. And in terms of inventory, let me give you the number in terms of days – in terms of days of inventory without this overstocking, it's around 40 days in March. And in terms of accounts payable for supplier, it's around 76 days.
Unidentified Analyst
Thank you.
Rafael Contreras
Yes.
Operator
Thank you very much for your question. Our next question is from Mr. Andrés Ortiz from BTG Pactual. Please go ahead.
Andrés Ortiz
Hello, Armando and Rafa, thank you for the space for questions. I would like to do a follow up on IFRS 16 first. Last quarter we saw two different stories, the 4Q we saw at 18% drop, and now we saw basically a 7% increase. So I want to understand if during 4Q, you actually did a provision for what was supposed to be accounted for all 2022. So during 4Q this year, we'll actually – we will actually see an comp for in terms of IFRS 16.
And the second question will be gross margin dynamics in Europe. And over the last two quarters we saw – or three quarters we saw a sharp increase in EBITDA margin and gross margin in Europe, basically 400 basis points. And today, margin dynamics in Europe were super strong. So I would like to understand this if you actually saw a better cost dynamics in Europe to upset what we have seen in the past.
Rafael Contreras
In terms of the first one is the IFRS 16. If you see, we open a line of rents this quarter. So you see last year that we have a benefit of 0.2% of sales. And this year it's is not a benefit. It's an expense of 1.4% in terms of rents. So that's the impact that we have quarter versus the other quarter, the benefit, you will see the benefit – a big benefit at the end of the fourth quarter because the result that we have last year, because of all the agreements that we had, all the fixed rent and viable rent that we have in that fourth quarter. So you are going to see a big benefit at the end of the fourth quarter.
Second or third quarter you are going to see almost the same impact that we have and less impact than the one that we have in this first quarter. But fourth quarter is going to be a pretty huge benefit impact that we're going to have in post-IFRS 16 numbers.
Andrés Ortiz
Okay, thank you. And on gross margins, maybe if you can comment if what level of pressure you saw during this quarter and how things are comparing to what we just saw during the second half of last year?
Rafael Contreras
The third quarter was at a pretty high impact in Europe because of the energy, as I mentioned. energy in terms of sales was 6.8%. Then it went back in the fourth quarter, 4.2x – 4.2% and 3% this quarter. So we expect to maintain in 3%. So also you are going to see a benefit of 300 basis points in the third quarter and almost say 100 basis points because of energy in the fourth quarter.
Andrés Ortiz
Okay. Understood. Thank you very much.
Operator
Thank you very much for your question. [Operator Instructions] Our next question is from Mr. Ulises Argote from JPMorgan. Please go ahead. Mr. Argote, you might be in mute.
[Operator Instructions] That was the last question. I will now hand over to Mr. Armando Torrado for final comments.
Armando Torrado
Okay. Well, thank you very much for attending our quarterly video conference, and if you have any further questions, please be in touch with our Investor Relations team. Thank you very much for connecting this morning and have a great day. And thank you. Thanks again. Bye-bye.
Operator
Alsea would like to thank you for participating in today's video conference. You may now disconnect.
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Alsea, S.A.B. de C.V. (ALSSF) Q1 2023 Earnings Call Transcript